[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



                     COMMITTEE PRINT TO AMEND THE 
                     FEDERAL TRADEMARK DILUTION ACT

=======================================================================

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON COURTS, THE INTERNET,
                       AND INTELLECTUAL PROPERTY

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 22, 2004

                               __________

                             Serial No. 72

                               __________

         Printed for the use of the Committee on the Judiciary


    Available via the World Wide Web: http://www.house.gov/judiciary


                                 ______

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                            WASHINGTON : 2003
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                       COMMITTEE ON THE JUDICIARY

            F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman
HENRY J. HYDE, Illinois              JOHN CONYERS, Jr., Michigan
HOWARD COBLE, North Carolina         HOWARD L. BERMAN, California
LAMAR SMITH, Texas                   RICK BOUCHER, Virginia
ELTON GALLEGLY, California           JERROLD NADLER, New York
BOB GOODLATTE, Virginia              ROBERT C. SCOTT, Virginia
STEVE CHABOT, Ohio                   MELVIN L. WATT, North Carolina
WILLIAM L. JENKINS, Tennessee        ZOE LOFGREN, California
CHRIS CANNON, Utah                   SHEILA JACKSON LEE, Texas
SPENCER BACHUS, Alabama              MAXINE WATERS, California
JOHN N. HOSTETTLER, Indiana          MARTIN T. MEEHAN, Massachusetts
MARK GREEN, Wisconsin                WILLIAM D. DELAHUNT, Massachusetts
RIC KELLER, Florida                  ROBERT WEXLER, Florida
MELISSA A. HART, Pennsylvania        TAMMY BALDWIN, Wisconsin
JEFF FLAKE, Arizona                  ANTHONY D. WEINER, New York
MIKE PENCE, Indiana                  ADAM B. SCHIFF, California
J. RANDY FORBES, Virginia            LINDA T. SANCHEZ, California
STEVE KING, Iowa
JOHN R. CARTER, Texas
TOM FEENEY, Florida
MARSHA BLACKBURN, Tennessee

             Philip G. Kiko, Chief of Staff-General Counsel
               Perry H. Apelbaum, Minority Chief Counsel
                                 ------                                

    Subcommittee on Courts, the Internet, and Intellectual Property

                      LAMAR SMITH, Texas, Chairman

HENRY J. HYDE, Illinois              HOWARD L. BERMAN, California
ELTON GALLEGLY, California           JOHN CONYERS, Jr., Michigan
BOB GOODLATTE, Virginia              RICK BOUCHER, Virginia
WILLIAM L. JENKINS, Tennessee        ZOE LOFGREN, California
SPENCER BACHUS, Alabama              MAXINE WATERS, California
MARK GREEN, Wisconsin                MARTIN T. MEEHAN, Massachusetts
RIC KELLER, Florida                  WILLIAM D. DELAHUNT, Massachusetts
MELISSA A. HART, Pennsylvania        ROBERT WEXLER, Florida
MIKE PENCE, Indiana                  TAMMY BALDWIN, Wisconsin
J. RANDY FORBES, Virginia            ANTHONY D. WEINER, New York
JOHN R. CARTER, Texas

                     Blaine Merritt, Chief Counsel

                         David Whitney, Counsel

                          Joe Keeley, Counsel

              Melissa L. McDonald, Full Committee Counsel

                     Alec French, Minority Counsel


                            C O N T E N T S

                              ----------                              

                             APRIL 22, 2004

                           OPENING STATEMENT

                                                                   Page
The Honorable Lamar Smith, a Representative in Congress From the 
  State of Texas, and Chairman, Subcommittee on Courts, the 
  Internet, and Intellectual Property............................     1
The Honorable Howard L. Berman, a Representative in Congress From 
  the State of California, and Ranking Member, Subcommittee on 
  Courts, the Internet, and Intellectual Property................     3

                               WITNESSES

Ms. Jacqueline A. Leimer, President, International Trademark 
  Association
  Oral Testimony.................................................     5
  Prepared Statement.............................................     6
Mr. Robert W. Sacoff, Chair, Section of Intellectual Property 
  Law, American Bar Association
  Oral Testimony.................................................    13
  Prepared Statement.............................................    15
Mr. Marvin J. Johnson, Legislative Counsel, American Civil 
  Liberties Union
  Oral Testimony.................................................    33
  Prepared Statement.............................................    35
Mr. David C. Stimson, Chief Trademark Counsel, Eastman Kodak 
  Company
  Oral Testimony.................................................    44
  Prepared Statement.............................................    45

                                APPENDIX
               Material Submitted for the Hearing Record

Letter from Michael K. Kirk, Executive Director, American 
  Intellectual Property Law Association to the Honorable Lamar S. 
  Smith, Chairman, Subcommittee on Courts, the Internet and 
  Intellectual Property..........................................    56

 
                     COMMITTEE PRINT TO AMEND THE 
                     FEDERAL TRADEMARK DILUTION ACT

                              ----------                              


                        THURSDAY, APRIL 22, 2004

                  House of Representatives,
              Subcommittee on Courts, the Internet,
                         and Intellectual Property,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:03 a.m., in 
Room 2141, Rayburn House Office Building, Hon. Lamar S. Smith 
(Chair of the Subcommittee) presiding.
    Mr. Smith. The Subcommittee on Courts, the Internet, and 
Intellectual Property will come to order. Today's hearing is on 
the committee print to amend the Federal Trademark Dilution 
Act. I will recognize myself for an opening statement, then the 
gentleman from California, the Ranking Member.
    Let me say to our witnesses and those in the audience that 
we are not going to be unduly hasty this morning, but we are 
going to try to expedite just because there is a Judiciary 
Committee bill that will be on the House floor, I am guessing 
around 11 o'clock and we would like to have time to hear all 
the witnesses and ample time for Members to ask questions, as 
well. And I will recognize myself, as I say, for an opening 
statement.
    We communicate through words and symbols on a daily basis. 
The trademark for our favorite product or service immediately 
broadcasts its presence to the world. The foundation of 
trademark law is that certain words, images, and logos convey 
meaningful information to the public, including the source, 
quality, and good will of a product or a service. 
Unfortunately, there are those in both commercial and non-
commercial settings who would seize upon the popularity of a 
trademark for their own purposes and at the expense of the 
rightful owner and public.
    Dilution refers to conduct that lessens the distinctiveness 
and value of a mark. This conduct can debase the value of a 
famous mark and mislead the consuming public.
    This Subcommittee wrote the Federal Trademark Dilution Act, 
or FTDA, during the 104th Congress. The act created additional 
and necessary protection for trademarks that was available for 
the first time on a national scale. While I believe that most 
policy makers, trademark scholars, and affected businesses 
would argue that the FTDA has functioned well since its 
passage, it is important for our Subcommittee to exercise its 
oversight prerogative and review the act's operation.
    For instance, has the recent Supreme Court ruling on the 
FTDA, the Mosely decision, compromised the property rights of 
trademark owners, or has the law, as one of our witnesses will 
testify, conferred too much power on trademark holders at the 
expense of free speech?
    While review of the entire dilution statute is in order 
this morning, I hope that this Subcommittee and our witnesses 
will concentrate on the committee print before us. The primary 
components of the print include the following.
    Subject to the principles of equity, the owner of a famous 
distinctive mark is entitled to an injunction against any 
person who commences use in commerce of a mark that is likely 
to cause dilution by blurring or tarnishment. The print 
specifies that injunctive relief is appropriate, even if there 
is no actual or likely confusion among the public, competition 
between the owner and the person, or actual economic injury to 
the owner.
    A mark may only be famous if it is widely recognized by a 
general consuming public in the United States as a source 
designation of goods or services of the mark's owner. In 
determining whether a mark is famous, a court is permitted to 
consider, quote, ``all relevant factors,'' end quote, in 
addition to prescribed conditions set forth in the print, 
including the duration, extent, and geographic reach of 
advertising and publicity of the mark.
    The print defines dilution by blurring as association 
arising from the similarity between a source designation and a 
famous mark that impairs its distinctiveness. Again, a court is 
permitted to consider all relevant factors in determining the 
presence of blurring.
    Specific factors that provide guidance in this regard 
include the degree of similarity between the source designation 
and the famous mark, the degree of inherent or acquired 
distinctiveness of the famous mark, and the degree of 
recognition of the famous mark.
    The print further defines dilution by tarnishment as 
association between a source designation and a famous mark 
arising from their similarity that harms a reputation of the 
famous mark.
    The committee print enumerates specific defenses to a 
dilution action: Fair use and comparative commercial 
advertising to identify the competing goods, non-commercial use 
of source designation, and all forms of news reporting and news 
commentary.
    Finally, the owner of a famous mark is only entitled to 
injunctive relief under the committee print unless in an action 
based on dilution by blurring the defendant willfully intended 
to trade on the famous mark's recognition or, in an action 
based on dilution by tarnishment, the defendant willfully 
intended to trade on the famous mark's reputation. In either 
case, the owner may also seek damages, costs, and attorneys' 
fees.
    Substantial portions of the committee print are based on 
the existing FTDA, but there are conspicuous differences 
between the texts. Under the committee print and in response to 
the Mosely decision, actual harm is not a prerequisite for 
injunctive relief. The definitions of blurring and tarnishment 
are new. The committee print also expands the threshold of fame 
and thereby denies protection for marks that are famous only in 
niche markets, which represents a deviation from case law in 
some circuits.
    Finally, the committee print specifies that State remedies 
for dilution are not preemptive.
    We have a very interesting subject today and an excellent 
roster of witnesses who can speak on the merits of dilution and 
so we look forward to their testimony. With that, I will 
recognize Mr. Berman, the Ranking Member.
    Mr. Berman. Thank you, Mr. Chairman, and thank you for 
scheduling this oversight hearing to discuss the committee 
print to amend the Federal Trademark Dilution Act.
    It has been over 8 years since the passage of that act and 
sufficient time has passed to analyze the effects of the 
Dilution Act on trademark law. We did a preliminary analysis 2 
years ago when we held a hearing on the Dilution Act in which 
we discussed proposed legislation to change the standard from 
actual dilution to likelihood of dilution. A much shorter bill 
than this one, its goal was to resolve the conflict between the 
circuits about the standard for dilution. That bill was held up 
for various reasons, including that the Supreme Court finally 
took a dilution case in an attempt to resolve the conflict. We 
are back here today because some believe the conflict has not 
been resolved.
    In 1995, the Federal Trademark Dilution Act was passed in 
order to protect, quote, ``famous trademarks from subsequent 
uses that blur the distinctiveness of the mark or tarnish or 
disparage it,'' end of quote. As a result of varying State 
dilution laws, the purpose was to bring uniformity and 
consistency to the protection of famous marks. However, a 
significant split developed among the courts in the 
interpretation of key elements of the Dilution Act.
    Last year, the Supreme Court took the step to resolve the 
controversy in its decision in Mosely v. Victoria's Secret 
Catalog. The Supreme Court interpreted the legislative intent 
of the Dilution Act to require demonstration of actual dilution 
based on the wording in the statute that the use would cause 
dilution. However, they did not require proof of lost sales or 
profits. The Court questioned whether dilution by tarnishment 
was covered by the act, as there was no specific reference to 
the theory within the language of the act.
    If we were to maintain an actual dilution standard as the 
Supreme Court suggests, a number of issues arise, including how 
would one prove actual dilution without demonstrating lost 
profits? Furthermore, the classic view of dilution by blurring 
is that the injury caused by dilution is the gradual diminution 
or whittling away at the value of the famous mark, or as 
Professor McCarthy analogizes, it is like being stung by 100 
bees where significant injury is caused by the cumulative 
effect, not just one.
    So then how do we determine that one small use can blur the 
distinctiveness of a famous mark, and at that point, is it 
already too late? The committee print before us today makes a 
number of changes to the act, the most notable being the 
clarification of the standard of dilution from actual to one of 
likelihood of dilution. Actual harm would no longer be a 
prerequisite to injunctive relief.
    In addition, the amendments include a clear reference to 
dilution by tarnishment. Furthermore, it elucidates the 
definition of fame by providing a list of factors, and also 
eliminates the protection of marks famous only in a niche 
market.
    I appreciate the expressed need to impose a more lenient 
standard. A likelihood of dilution standard would no longer 
unfairly require the senior user to, one, wait until injury 
occurs before bringing suit, or secondly, face the threat that 
the senior user failed to actively protect their marks. It 
would also allow new companies to seek a declaratory judgment 
that their mark does not dilute, which would prevent 
unnecessary expenditures in the launch of their products. 
However, I am not convinced that a likelihood of dilution 
standard combined with the other amendments in the committee 
print do not create an aura of over-protectionism.
    When establishing the Federal Dilution Act, we memorialized 
a doctrine that protects the property interest in a trademark, 
not just the typical infringement goal which is designed to 
protect the public from confusion. Are we now creating a 
situation which provides a zone of exclusivity for a trademark? 
One of our goals is to maintain the balance between fair 
competition and free competition to keep the economy working at 
a reasonable rate of efficiency and competitiveness. With 
passage of a lesser standard, will we, in essence, create a 
trademark protection which translates to a property right en 
grosse?
    Furthermore, I am concerned how, if at all, this will 
affect First Amendment and Free Speech issues. Subsequent to 
the hearing this Subcommittee held on the Dilution Act in 
February of 2002, the ACLU voiced concerns relating to stifling 
critics with the potential weapon of an injunction for a mere 
likelihood of tarnishment. They are concerned with the balance 
between the rights of trademark holders and the First 
Amendment.
    I am interested in hearing further about these issues and 
why these concerns may not be addressed in the exemptions for 
fair use in advertising, non-commercial use, and news reporting 
provided for in the act, or in the alternative, what is 
included in this legislation to specifically protect that 
freedom.
    I look forward to hearing from the witnesses to shed light 
on why the standard needs to be changed and how the legislation 
would affect balance in the economic market, trademark 
litigation, and free speech forums.
    I look forward to working with you, Mr. Chairman, to 
further evaluate the act and the changes recommended at today's 
hearing. I yield back.
    Mr. Smith. Thank you, Mr. Berman.
    Our first witness is Jacqueline Leimer, who is testifying 
on behalf of the International Trademark Association, or INTA. 
Ms. Leimer is President of INTA and also serves as Chief 
Counsel, Global Trademarks for Kraft Foods Global, 
Incorporated. Before joining Kraft, Ms. Leimer was a partner in 
the Chicago law firm of Kirkland and Ellis. She received her 
B.A. and J.D. degrees from Valpraiso University.
    The next witness is Mr. Robert Sacoff, who is testifying on 
behalf of the American Bar Association. Mr. Sacoff chairs the 
ABA's Intellectual Property Law Section and is a partner in the 
law firm of Pattishall, McAuliffe, Newbury, Hilliard, and 
Geraldson. In addition to having served on the boards of the 
American Intellectual Property Law Association and INTA, Mr. 
Sacoff lectures extensively on trademark law. He earned his 
A.B. degree from Notre Dame and his J.D. from Northwestern.
    Our third witness is Marvin Johnson, who serves as 
Legislative Counsel for the American Civil Liberties Union, 
where he focuses on First Amendment issues. Before relocating 
to Washington, Mr. Johnson worked as Executive Director of the 
ACLU chapter in his native Wyoming. Mr. Johnson earned his B.S. 
and J.D. degrees from the University of Wyoming.
    Our final witness is David Stimson, the Chief Trademark 
Counsel for Eastman Kodak, where he has worked since 1986. 
Before joining Kodak, Mr. Stimson was a partner in the New York 
firm of Rogers, Hoge, and Hills. He received his B.A. from 
Hamilton College and his J.D. from the University of 
Cincinnati.
    Welcome to you all. We have your written statements, and 
without objection, the entire written statements will be made a 
part of the record.
    Ms. Leimer, we will begin with you.

  STATEMENT OF JACQUELINE A. LEIMER, PRESIDENT, INTERNATIONAL 
                     TRADEMARK ASSOCIATION

    Ms. Leimer. Good morning, Mr. Chairman. Thank you for 
holding today's hearing.
    Perhaps the easiest way to realize the value of trademarks 
is to imagine a world without them. How would we decide what 
food to buy, whose services to use, or how to differentiate the 
medicines prescribed by our doctors? Trademarks tell us what we 
like, what is safe, and what represents quality. They are an 
important part of everyday life, and for this reason, the law 
protects against trademark infringement, the use of trademarks 
in a manner that confuses or deceives consumers.
    Next, I ask you to think about those marks, relatively few 
in number, that are so well known that they have become a 
cultural icon. They come to mind without the slightest 
hesitation and inspire what leading trademark scholar Jerry 
Gilson has called abundant goodwill and consumer loyalty. These 
are famous marks, and in 1996, the Federal Trademark Dilution 
Act was enacted to provide them with additional protection.
    There are two widely accepted types of dilution. The first 
is blurring, a reduction in the distinctiveness of the famous 
mark, its ability to identify goods or services as originating 
from a particular source. The second is tarnishment of a famous 
mark's reputation. In a dilution case, the court can enjoin a 
junior use that blurs or tarnishes a famous mark even when 
there is no infringement.
    A Federal dilution remedy has played an important role in 
protecting famous trademarks. It helped to stem the tide of 
cyber squatting during the earliest days of online commerce and 
stopped uses like ``Adults-R-Us,'' an obvious play on Toys-R-
Us, from being used as a source for sexually explicit material.
    In spite of these successes, there remain a number of 
dilution-related issues on which the courts are split and the 
language of the statute led the Supreme Court in its Mosely 
decision to rule that proof of actual harm is required in a 
dilution case, a decision that does not account for the need to 
prevent dilution at its incipiency before the effectiveness and 
reputation of the famous mark is lost.
    INTA has therefore come to the conclusion that the FTDA is 
in need of revision.
    Because the dilution remedy can be applied regardless of 
infringement, we suggest that it be available only to a narrow 
class of marks, specifically, those marks that are widely 
recognized by the general consuming public of the United 
States. This should be explicit in the statute. Non-exclusive 
factors are a useful guide in determining whether a mark meets 
the standard and the committee print sets forth what those 
factors might be.
    The statute should also expressly provide that famous marks 
are protected from the likelihood that they will be diluted. 
This standard permits a famous mark owner to prevent dilution 
at its incipiency and not have to wait until the mark is 
damaged beyond repair.
    We further recommend that the dilution statute be revised 
to make it clear that there are two distinct causes of action, 
one for likelihood of dilution by blurring and one for 
likelihood of dilution by tarnishment. In each case, there 
should be no liability unless the famous mark owner can prove a 
likely association between its mark and the junior use based on 
the similarity between the two marks. With respect to 
tarnishment, a plaintiff should have to demonstrate that this 
likely association would harm the reputation of the famous 
mark.
    In a case of blurring, the plaintiff should also 
demonstrate that the likely association would, over time, 
impair the distinctiveness of the famous mark. Where the famous 
mark and junior use are identical, this should not be difficult 
to do. Not so clear, however, is what analysis should take 
place when the famous mark and the junior use are not 
identical. To remedy this, a revised statute should provide a 
list of non-exclusive factors for a court to use in rendering a 
decision. Again, the committee print details what those factors 
might be.
    A revised statute should also preserve the First Amendment 
defenses in the current FTDA. These defenses have worked well. 
To further protect free speech rights, we suggest that the 
plaintiff in a dilution case be required to demonstrate that 
the defendant is using the challenged mark as a designation of 
source for its own goods or services. In other words, he is 
using the challenged mark as his own trademark. This 
requirement will protect fair uses of a famous mark and 
safeguard all legitimate parody and satire, even if that parody 
and satire appear in a commercial context.
    This concludes my opening statement. I thank the 
Subcommittee for the opportunity to testify. I would be pleased 
to answer your questions.
    Mr. Smith. Thank you, Ms. Leimer.
    [The prepared statement of Ms. Leimer follows:]

               Prepared Statement of Jacqueline A. Leimer

                            I. INTRODUCTION

    Good morning, Mr. Chairman. My name is Jacqueline A. Leimer. I am 
chief counsel, global trademarks for Kraft Foods Global, Inc. and serve 
as president of the International Trademark Association (INTA). As do 
all INTA officers, board members and committee members, I serve INTA on 
a voluntary basis.
    INTA supports revision of the Federal Trademark Dilution Act (FTDA) 
\1\ and encourages Congress to enact legislation that will provide 
greater clarity regarding protection afforded under the statute, better 
define the standard of proof for dilution, and strengthen protection 
for free speech interests. INTA's support for revising the FTDA in this 
manner comes after a nine-month comprehensive study of dilution law 
that was undertaken by a select committee of trademark experts. My 
predecessor as INTA president, Kathryn Barrett Park, organized the 
select committee after the U.S. Supreme Court decision in Moseley v. V 
Secret Catalogue, Inc.,\2\ in which the court addressed a number of 
dilution issues, particularly the standard of proof for a dilution 
claim. I was honored to have chaired the select committee in my 
capacity then as the executive vice president of INTA.
---------------------------------------------------------------------------
    \1\ Pub. L. No. 104-98, 109 Stat. 505 (1995).
    \2\ 123 S. Ct. 1115 (2003).
---------------------------------------------------------------------------
    INTA is a 126-year-old not-for-profit organization comprised of 
over 4,300 members. It is the largest organization in the world 
dedicated solely to the interests of trademark owners. The membership 
of INTA, which crosses all industry lines and includes both 
manufacturers and retailers, values the essential role that trademarks 
play in promoting effective commerce, protecting the interests of 
consumers, and encouraging free and fair competition. INTA has a long 
history of making recommendations to the Congress in connection with 
federal trademark legislation, including: the Trademark Law Revision 
Act of 1988 (TLRA),\3\ the Anticybersquatting Consumer Protection Act 
of 1999,\4\ the Trademark Law Treaty,\5\ and the Madrid Protocol 
Implementation Act.\6\
---------------------------------------------------------------------------
    \3\ See 134 Cong. Rec. S. 16974 (daily ed. Oct. 20, 1988) 
(Statement of Sen. DeConcini).
    \4\ See, e.g., S. Rep. No. 106-140, 106th Cong. 1st Sess. (1999) 
(relying on statements by INTA's president, made before the Senate 
Judiciary Committee).
    \5\ See H.R. Rep. No. 412, 106th Cong. 1st Sess. (1999).
    \6\ See Cong. 126 Rec. S. 9690 (daily ed. October 1, 2002) 
(Statement of Senator Leahy).
---------------------------------------------------------------------------
                        II. HISTORY OF THE FTDA

    INTA was also a prime advocate for passage of the FTDA, which 
became law on January 16, 1996.\7\ The association believed that a 
federal dilution statute was needed to protect famous marks because 
``[t]hey are enormously valuable but fragile assets, susceptible to 
irreversible injury from promiscuous use.'' \8\
---------------------------------------------------------------------------
    \7\ See H. Rep. No. 104-879, 104th Cong. 2nd Sess. (1997) (noting 
use of testimony from INTA's executive vice president).
    \8\ The United States Trademark Association (predecessor to the 
International Trademark Association), ``The United States Trademark 
Association Trademark Review Commission Report and Recommendations to 
USTA President and Board of Directors,'' 77 Trademark Rep. 375, 455 
(1987).
---------------------------------------------------------------------------
    The FTDA affords protection that is different from trademark 
infringement protection. Dilution does not rely upon the standard test 
of infringement, that is, the likelihood of confusion, deception, or 
mistake. Rather, the FTDA provides equitable relief to the owner of a 
famous mark against another person's commercial use of a mark or trade 
name that lessens the ``distinctive quality of the [famous] mark,'' \9\ 
``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.'' \10\ The statute also sets forth 
criteria that a court should consider in determining whether a mark is 
famous; establishes an injunction as the primary form of relief; and 
provides statutory defenses to a dilution claim.\11\ In 1999, Congress 
granted holders of famous trademarks the right to oppose a trademark 
application or cancel a trademark registration based on dilution of 
their marks.\12\
---------------------------------------------------------------------------
    \9\ 15 U.S.C. Sec. 1125(c).
    \10\ 15 U.S.C. Sec. 1127.
    \11\ 15 U.S.C. Sec. 1125(c).
    \12\ Pub. L. No. 106-43.
---------------------------------------------------------------------------
                 III. THE NEED FOR REVISION OF THE FTDA

    Since its adoption in 1996, the FTDA has served a valuable role in 
protecting famous trademarks. For example, during the earliest days of 
online commerce, before Congress passed the Anticybersquatting Consumer 
Protection Act, the FTDA helped to stem the tide of the registration 
and trafficking in Internet domain names with the bad-faith intent to 
benefit from another's trademark. At the same time, however, after more 
than eight years, there remain open questions and courts are divided on 
a number of key dilution-related concepts regarding the intent of 
Congress when it adopted the FTDA. For example:

        1.  What is a famous mark? Some courts have opted to be more 
        ``discriminating and selective'' \13\ in terms of what is 
        protectable, while others have defined fame more broadly.\14\ 
        In particular, should marks that are famous only in a ``niche'' 
        market and, therefore, well known only to a select class or 
        group of purchasers, or in a limited geographic region, qualify 
        as ``famous'' within the meaning of the present statute? This 
        too is an unsettled question.\15\
---------------------------------------------------------------------------
    \13\ I.P. Lund Trading ApSand Kroin Inc. v. Kohler Co and Robern, 
Inc., 163 F.3d 27, 46 (1st Cir. 1998).
    \14\ See, e.g., Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208, 215 
(2d Cir. 1999) (The term ``fame'' is used in an ``ordinary English 
language sense'' in the FTDA.); Gazette Newspapers, Inc. v. New Paper, 
Inc., 934 F. Supp. 688, 690 (D. Md. 1996). In the Gazette case, ``the 
court applied the FTDA to protect the use of `Gazette' in only two 
counties in Maryland. The court failed to recognize, however, that 
there are at least seven major newspapers around the country that use 
`Gazette' in their titles.'' Paige Dollinger, ``The Federal Trademark 
Anti-Dilution Act: How Famous is Famous?'' at http://www.kentlaw.edu/
honorsscholars/2001Students/writings/dollinger.html#--ftnref66, 
citations omitted.
    \15\ Cases supporting niche fame, see, e.g., Advantage Rent-A-Car, 
Inc. v. Enterprise Rent-A-Car, 238 F.3d 378, 381 (5th Cir. 2001) 
(``Enterprise needed only to show that its `We'll Pick You Up' mark is 
famous within the car rental industry, not in a broader market.''); 
Thane Int'l, Inc. v. Trek Bicycle Corp., 305 F.3d 894 (9th Cir. 2002) 
(``We are bound by Avery Dennison, 189 F.3d 868 (9th Cir. 1999), to 
accept and apply the niche fame concept.''). Not in support of niche 
fame, see, e.g., TCPIP Holding Co. v. Haar Comms., Inc., 244 F.3d 88, 
99 (2d Cir. 2001) (It is unlikely that ``Congress intended to grant 
such outright exclusivity to marks that are only famous in a small area 
or segment of the nation.''); I.P. Lund Trading ApSand Kroin Inc. v. 
Kohler Co and Robern, Inc., 163 F.3d 27 (1st Cir. 1998).

        2.  Does the FTDA only protect famous marks that are inherently 
        distinctive, or does it also cover famous marks that have 
        acquired distinctiveness, i.e., gained secondary meaning over 
        time? \16\ In trademark parlance, ``distinctiveness'' refers to 
        the ability of a mark to identify goods or services as 
        originating from a particular source--either immediately (as in 
        the case of inherently distinctive marks) or only after a 
        significant period of time or investment (as in the case of 
        marks with acquired distinctiveness).
---------------------------------------------------------------------------
    \16\ See, e.g., TCPIP Holding Co. v. Haar Comms., Inc., 244 F.3d 
88, 95 (2d Cir. 2001) (ruling that protection under the FTDA is limited 
to famous marks that are inherently distinctive); Avery Dennison Corp. 
v. Sumpton, 189 F.3d 868, 877 (9th Cir. 1999) (``We reject appellant's 
argument that the distinctiveness required for famousness under the 
Federal Trademark Dilution Act is inherent, not merely acquired 
distinctiveness.''); Times Mirror Magazine, Inc. v. Las Vegas Sporting 
News LLC, 212 F.3d 157, 167 (3d Cir. 2000) (holding that marks that 
have acquired distinctiveness are eligible for protection under the 
FTDA).

        3.  Whether tarnishment is covered under the FTDA was a 
        question posed by the Supreme Court in dicta in the Moseley 
        decision. This comment was based on the statutory language 
        ``dilution of the distinctive quality of the famous mark,'' 
        which, in the view of the court, might not go to injury to the 
        reputation of a famous mark, the underlying concept of dilution 
        by tarnishment.\17\ Notwithstanding this question, tarnishment, 
        along with blurring, has long been and is still regarded by 
        trademark scholars as one of the ``two different dimensions'' 
        of dilution.\18\
---------------------------------------------------------------------------
    \17\ 123 S. Ct. 1115, 1124 (2003).
    \18\ 4 J. Thomas McCarthy, McCarthy on Trademarks and Unfair 
Competition '24:67, at 24-128 (4th ed. 2003). See also 2 Jerome Gilson, 
Trademark Protection and Practice Sec. 5A.01[2], at 5A-7 (Rel. 50-
December 2003).

        4.  Finally, what is dilution and how does a famous trademark 
        owner go about proving it? In Moseley, the Supreme Court held 
        that the FTDA requires proof of actual harm and that consumers' 
        mere mental association between the famous and challenged 
        marks, whatever its effect on the famous mark, is generally 
        insufficient to establish such harm, particularly when the 
        marks in question are not identical.\19\ But, as I will explain 
        later, this holding is problematic, as it does not account for 
        the need to prevent dilution at its incipiency, before the 
        effectiveness and reputation of the mark is lost.
---------------------------------------------------------------------------
    \19\ Moseley v. V Secret Catalogue, Inc., 123 S. Ct. 1115, 1124 
(2003).

    These and other key questions, Mr. Chairman, should be answered 
through a revision of the FTDA, and not by forum shopping or waiting 
for further costly litigation to provide us with a solution. Congress 
should take the opportunity to better focus the application of the 
federal dilution statute, while at the same time clarifying the meaning 
of the harm the statute aims to prevent, as well as the manner in which 
a dilution claim is proven.

                         IV. REVISING THE FTDA

    Below are the principles underlying INTA's recommendation for a 
revision of the FTDA. To help the subcommittee in its review, I have 
divided these recommendations into four categories: ``Qualifications 
for Protection,'' ``Blurring and Tarnishment,'' ``Safeguarding Free 
Speech,'' and ``Relief and Preemption.''
A. Qualifications for Protection
    INTA believes that fame should remain the critical requirement to 
qualify for federal dilution protection. As Jerome Gilson, a leading 
U.S. trademark law expert has stated, these marks inspire ``abundant 
good will and consumer loyalty . . . and federal dilution law protects 
the substantial investment necessary to advertise and promote the 
mark.'' \20\
---------------------------------------------------------------------------
    \20\ 2 Gilson, supra note 18, Sec. 5A.01[4][a], at 5A-10.
---------------------------------------------------------------------------
    A revised dilution statute should expressly state that famous marks 
with inherent or acquired distinctiveness are eligible for protection, 
because at least one circuit court of appeals has found enough 
ambiguity in the current statute to exclude famous marks with acquired 
distinctiveness \21\ and because a designation that ``has achieved 
trademark status only through the acquisition of secondary meaning is 
certainly capable of acquiring a greater degree of distinctiveness and 
achieving the status of `famous' mark.'' \22\
---------------------------------------------------------------------------
    \21\ TCPIP Holding Co. v. Haar Comms., Inc., 244 F.3d 88, 95 (2d 
Cir. 2001).
    \22\ 4 McCarthy, supra note 18, Sec. 24:91.1, at 24-166 (commenting 
on existing FTDA) (citation omitted).
---------------------------------------------------------------------------
    While INTA believes that fame should remain the threshold needed in 
order to qualify for protection under a federal dilution statute, we do 
suggest that a revised statute should be more explicit as to what marks 
qualify as ``famous.'' INTA recommends that Congress define the scope 
of fame as being limited to marks, whether or not they are registered 
with the U.S. Patent and Trademark Office, that are ``widely recognized 
by the general consuming public of the United States.'' This standard 
does narrow the set of marks that would qualify for federal dilution 
protection. But, in our opinion, it is an appropriate step. This new 
standard would help to alleviate the ``contradictory and inconclusive'' 
\23\ nature of the existing statutory language and legislative history 
on this issue, which has led to inconsistent decision-making and 
discomfort among some judges who feel compelled to render a finding of 
fame even though the mark in question is well known to a limited number 
of people. It will ensure that the broad protections against dilution 
provided for in the statute are available only to the select class of 
marks for which improper associations would be most damaging.\24\ In 
addition, we believe this standard would also allow smaller companies 
to use marks in their businesses without undue restriction.
---------------------------------------------------------------------------
    \23\ Id., '24:112.1, at 24-273.
    \24\ Dilution cases are not limited by similarities of the goods, 
or confusion, or other marketplace factors. ``[A] dilution injunction . 
. . will generally sweep across broad vistas of the economy.'' Mattel, 
Inc. v. MCA Records, Inc., 296 F.3d 894, 905 (9th Cir. 2002).
---------------------------------------------------------------------------
    Under the proposed standard, marks that are famous in a niche 
product or service market or that are recognized only in a limited 
geographic region will not qualify for federal dilution protection. 
State dilution laws and, in appropriate cases, infringement and unfair 
competition statutes, such as Sec. 43(a) of the Lanham Act, will afford 
adequate protection of the senior user's mark in these cases.
    INTA considers non-exclusive factors to be a useful guide to mark 
owners and the judiciary in determining whether a mark is famous. The 
current FTDA fame factors that a court may consider are, but are 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.\25\
---------------------------------------------------------------------------
    \25\ 15 U.S.C. Sec. 1125(c)(1).

    INTA proposes that the existing fame factors be simplified and 
---------------------------------------------------------------------------
replaced as follows:

        (A) the duration, extent, and geographic reach of advertising 
        and publicity of the mark, whether advertised or publicized by 
        the owner or third parties;

        (B) the amount, volume, and geographic extent of sales of 
        goods or services offered under the mark; and

        (C) the extent of actual recognition of the mark.

    The first and second factors reflect traditional concepts of 
marketplace recognition that courts have applied for decades and 
incorporate some of the existing factors. The third factor, ``the 
extent of actual recognition of the mark,'' is meant to incorporate 
survey evidence, market research such as brand awareness studies, and 
even unsolicited media coverage.
    Some of the factors contained in the current statutory test are 
omitted from INTA's proposal. For the most part, their absence stems 
from the fact that they are already accounted for in the definition 
itself, or are, in our view, not relevant to the issue of fame. For 
example, since INTA's proposed definition of fame specifies that the 
mark must be ``widely recognized by the general consuming public of the 
United States,'' the current factors dealing with the geographic extent 
of use and recognition in the junior user's trading area and channels 
of trade are no longer necessary. Because the mere existence of a 
registration is really not relevant at all to the question of fame, we 
suggest that it be omitted as well.
B. Blurring and Tarnishment
    In INTA's opinion, famous marks should be expressly protected by 
statute from the likelihood that they will be either blurred or 
tarnished. A revised statute should be clear on what constitutes a 
likelihood of dilution by blurring and what constitutes likelihood of 
dilution by tarnishment.

            1. The Incipient Nature of Dilution
    First, why should likelihood of dilution be actionable as opposed 
to actual dilution? This question was at the heart of the Moseley case. 
In its decision, the Supreme Court ruled, ``the text [of the FTDA] 
unambiguously requires a showing of actual dilution, rather than a 
likelihood of dilution.'' \26\ In particular, the court cited Section 
43(c)(1) of the Lanham Act, which 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.\27\ The court did, 
however, hold that proof of actual dilution does not require a showing 
of the economic consequences of dilution, such as lost sales or 
revenues.\28\
---------------------------------------------------------------------------
    \26\ Moseley v. V Secret Catalogue, Inc., 123 S. Ct. 1115, 1124 
(2003).
    \27\ Id. (emphasis added).
    \28\ Id. (commenting on the ruling of the Fourth Circuit in 
Ringling Bros.--Barnum & Bailey Combined Shows, Incorporated v. Utah 
Division of Travel Development, 170 F.3d 449 (4th Cir.1999)).
---------------------------------------------------------------------------
    INTA submits that a dilution cause of action should not require an 
actual, provable change in the way consumers think about the famous 
mark. This approach, which the Supreme Court adopted based on the 
language of the existing FTDA, does not account for the need to prevent 
dilution at its incipiency, the core concept underlying the dilution 
remedy. In the opinion of INTA, the owner of a famous mark should be 
able to obtain an injunction against the first offending use, even if 
that use has not yet resulted in provable damage to the mark. Because 
dilution is a process by which the value of a famous mark is diminished 
over time, either by one or multiple users, the owner of the famous 
mark should not be required to wait until the harm has advanced so far 
that, in the case of blurring, the recognition of the mark, and in a 
tarnishment case, the reputation of the mark, is permanently impaired.
    Moreover, if the owner of a famous mark must wait years to 
challenge the multiple uses that have entered the marketplace in the 
interim, the defendants in those cases will be poorly served as well. 
Junior users will have invested in the allegedly diluting marks over 
the course of time, placing their accrued goodwill in great jeopardy. 
And, given the great hardship that a junior user could suffer as a 
result of delay in challenging the marks, a court could apply the 
laches defense. The present FTDA, as interpreted by the Supreme Court, 
thus presents the plaintiff with a Hobson's choice: sue too early and 
lose because the harm is not yet provable, or sue too late and lose on 
laches grounds.
    Accordingly, the most practical way to express the incipient nature 
of dilution in a manner a court will understand, is to expressly phrase 
the cause of action as a likelihood of dilution--that is, that the 
junior use is likely to cause dilution (whether by blurring or by 
tarnishment) if allowed to continue unchecked.

            2. Dilution by Blurring
    INTA recommends a new statutory approach to addressing a claim of 
likelihood of dilution by blurring. We recommend that the statute 
require the owner of a famous mark to prove a likelihood of association 
between its mark and the junior mark, arising from the similarity of 
the marks, which would impair the distinctiveness of the famous mark.
    Under this test, not just any mental association will suffice--it 
must be an association that arises from the similarity (or identity) of 
the two marks, as opposed to an association that arises because of 
product similarities or competition between the owners of the two 
marks. Moreover, it is association that is likely to impair the 
distinctiveness of the senior mark.
    For example, let us assume that the CLOROX mark is ``widely 
recognized by the general consuming public of the United States.'' It 
is a completely made up term, created only for the purpose of 
functioning as a trademark, not used elsewhere in the commercial arena, 
and associated only with a supplier of household cleaning products and 
detergents. If another company begins to produce CLOROX sneakers, there 
is little question that consumers will draw an association between the 
two marks due to their identity and the high degree of distinctiveness 
of the mark. This association will over time reduce the distinctiveness 
of the CLOROX mark, i.e., it will make it less likely over time that 
consumers will identify the goods and services bearing the name CLOROX 
as originating from a particular source. In short, dilution is highly 
likely, and indeed is probably already underway, although the 
impairment to the senior mark may not yet be manifest.
    Another situation would be one where the famous, senior mark is not 
as distinctive as CLOROX or the junior mark is not identical or 
virtually identical to the senior mark. In this type of situation, 
courts could use the factors for dilution by blurring (addressed later) 
to determine whether the requisite association and impairment are 
likely. The use of the likelihood of dilution standard in INTA's 
proposal would make clear that relief can be granted based on a court's 
assessment of the relevant factors, without proof of actual dilution as 
presently required by the Supreme Court in Moseley.

    3. Blurring Factors
    INTA recommends that a revised federal dilution statute contain 
non-exclusive factors to assist courts in determining whether there is 
a likelihood of dilution by blurring. A court will need to balance all 
of these factors, as well as any others it may deem relevant in order 
to make a determination as to whether there is a likelihood of dilution 
by blurring. INTA proposes that Congress consider the following:

        1.  The degree of similarity between the junior use and the 
        famous mark.

        2.  The degree of inherent or acquired distinctiveness of the 
        famous mark.

        3.  The extent to which the owner of the famous mark is 
        engaging in substantially exclusive use of the mark.

        4.  The degree of recognition of the famous mark.

        5.  Whether the junior user intended to create an association 
        with the famous mark.

        6.  Any actual association between the junior use and the 
        famous mark.

    Factor one is self-evident and refers to step one of the blurring 
analysis: How similar are the two marks? The less similar the marks, 
the less likely a consumer association between the marks.
    The degree of inherent or acquired distinctiveness of the famous 
mark considers the extent to which the public may identify the mark 
with a single source. Further, this factor considers whether the mark 
is sufficiently strong to allow single-source identification upon 
initial use of the mark. The more distinctive and memorable the mark, 
the more it is likely to be blurred by the use of other identical or 
similar marks. The more common or descriptive the mark, the less likely 
it is to be blurred by uses of identical or similar marks.
    Factor three, the extent to which the owner of the famous mark is 
engaging in substantially exclusive use of the mark, asks the court to 
determine whether other trademark uses similar to the famous mark 
already exist in the marketplace. If, for example, the famous mark is 
in substantially exclusive use, it could indicate that the mark's 
distinctiveness is more likely to be impaired by the junior use. 
Conversely, where other similar marks are already in use, it may be 
somewhat less likely that the junior use will have the effect of 
blurring the famous mark, unless those uses have little or no 
visibility to the average consumer.
    The degree of recognition is another way of asking, ``just how 
famous is the famous mark?'' The more famous the mark, the more likely 
it will be memorable such that the association will be made, and the 
more likely that the association will impair the distinctiveness of the 
mark in the sense of how well it stands out in the marketplace.
    If it is found that the defendant intended to trade on the 
recognition of the famous mark, then the defendant presumably used the 
junior mark with the expectation that consumers would associate their 
mark with the famous mark. This factor operates as an admission by the 
defendant that the senior mark has a sufficient degree of fame such 
that the mark can be blurred, and that the defendant sought to 
appropriate that fame to itself in order to direct consumers' attention 
toward its own mark.
    The last factor, actual association, refers to evidence found in 
surveys, news items that reference both of the marks, and other 
evidence that may support a finding that the requisite association 
between the marks is likely to occur.

            4. Dilution by Tarnishment
    In light of the ambiguity created by the Supreme Court's comments 
in the Moseley decision, INTA believes that it is important to 
expressly state in a revised federal dilution statute that tarnishment 
is within the scope of the law. Owners of famous trademarks should be 
able to protect their significant investment against negative 
associations, absent a protectable free speech interest, which is 
discussed in more detail below. INTA suggests that a revised federal 
dilution statute find liability for tarnishment if a junior use is 
likely to harm the reputation of the famous mark. This standard is used 
in state dilution statutes and most courts have capably adjudicated 
claims of tarnishment under this standard.
C. Safeguarding Free Speech
    INTA believes that it is essential when revising the federal 
dilution law for Congress to confirm that the rights of famous mark 
owners do not interfere with free speech protections that are 
guaranteed by the First Amendment. To accomplish this goal, we 
recommend that a revised dilution statute expressly provide as an 
essential element of the cause of action for dilution, whether for 
dilution by blurring or dilution by tarnishment, that the plaintiff 
demonstrate that the defendant is using the challenged mark as a 
``designation of source'' (e.g., trademark, trade name, logo, etc.) for 
the defendant's own goods or services.
    A requirement of defendant's use as a designation of source will 
prevent any descriptive fair use \29\ or nominative fair use \30\ from 
falling within the ambit of the revised statute. For example, a 
defendant using a famous mark to refer to the trademark owner's goods 
in comparative advertising, or a newspaper using the famous mark to 
refer to the mark owner's goods for purposes of news reporting or 
commentary, would not qualify as use as a designation of source for the 
defendant's own goods or services, and therefore would not be covered 
by the statute at all. Moreover, the requirement of use as a 
designation of source for the junior user's own goods or services 
should protect all legitimate parody and satire, even if that parody 
and satire appears in a commercial context. It is INTA's strong belief 
that this requirement is necessary to protect free speech and to ensure 
that dilution protection is appropriately limited.
---------------------------------------------------------------------------
    \29\ Descriptive fair use (or classic fair use) is the use of a 
normal English word in its normal English meaning to describe one's own 
product or service.
    \30\ Nominative fair use is when the alleged infringer uses the 
plaintiff's mark to refer to the plaintiff or the plaintiff's goods. It 
generally applies (a) where the mark is reasonably needed to identify 
the mark owner's goods or services, (b) where the use is not more than 
is needed to identify the mark owner's goods or services, and (c) where 
there is no implication of endorsement. See, e.g., New Kids on the 
Block v. News Am. Publ'g, Inc., 971 F.2d 302 (9th Cir. 1992).
---------------------------------------------------------------------------
    The ``designation of source'' requirement will serve to strengthen 
the existing statutory defenses to a dilution claim:

        (A) 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.

        (B) Noncommercial use of a mark.

        (C) All forms of news reporting and news commentary.\31\
---------------------------------------------------------------------------
    \31\ 15 U.S.C. Sec. 1125(c)(4).

    These defenses, as interpreted and applied by the courts, have 
worked well to protect parties using famous marks as a form of free 
expression and should therefore remain part of a revised federal 
dilution law.\32\
---------------------------------------------------------------------------
    \32\ See, e.g., Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894 
(9th Cir. 2002); American Family Life Insurance Co. v. Hagan, 64 
U.S.P.Q.2d 1865, 1874-75. In these cases, both courts provided a broad 
application of the FTDA's noncommercial exemption.
---------------------------------------------------------------------------
D. Relief and Preemption
    INTA recommends that an injunction should continue to be the 
principal form of relief in a federal dilution claim. The plaintiff 
should continue to be entitled to remedies set forth in Sections 35(a) 
(profits, damages, and cost of the action) and 36 (destruction of goods 
bearing the registered mark) of the Lanham Act, subject to the 
discretion of the court and the principles of equity, if willful intent 
is proven. However, we suggest that a revised statute specify that in 
order to recover damages, willful intent to trade on the recognition of 
the famous mark must be proved for blurring claims, and willful intent 
to trade on the reputation of the famous mark must be proved for 
tarnishment claims.
    INTA believes that a federal dilution statute should not preempt 
state dilution laws because preemption would adversely affect the 
ability of relief for intrastate and regional conduct to the extent 
permitted under state dilution laws. A valid federal registration 
should, however, be a complete bar to a state dilution claim. This is 
the scenario under the FTDA and we recommend that it remain unchanged 
in a revised federal dilution statute.

                             V. CONCLUSION

    Thank you, Mr. Chairman, for the opportunity to testify before the 
subcommittee. INTA looks forward to working with Congress and 
interested parties in addressing issues related to the revision of the 
FTDA.

    Mr. Smith. Mr. Sacoff.

 STATEMENT OF ROBERT W. SACOFF, CHAIR, SECTION OF INTELLECTUAL 
             PROPERTY LAW, AMERICAN BAR ASSOCIATION

    Mr. Sacoff. Mr. Chairman, Congressman Berman, thank you for 
your invitation to the ABA to appear before you today. The 
views that I express today and have expressed in our written 
statement advocating amendment of the Federal Trademark 
Dilution Act of 1985 to change the actual dilution standard 
articulated by the Supreme Court in Mosely to a likelihood of 
dilution standard have been adopted as ABA policy by our Board 
of Governors, therefore, represent views of the association. My 
comments on the other issues represent the views of the 
Intellectual Property Law Section, which I chair, as they have 
not gone up to or been approved by the House of Delegates or 
Board of Governors of the American Board Association.
    As you know, the ABA is a volunteer association of many 
lawyers. Briefly, I would just like to mention that many of its 
hard-working members contributed to the work that led to the 
policy statements we have submitted, the lengthy statement with 
a lot of case analysis--I can't name them all, but wish to 
mention my colleague, Jonathan Jennings, who chaired the 
Federal Trademark Legislation Committee, and also Jonathan 
Hadis, who is here this morning, who led the Subcommittee on 
this very large project.
    It is timely and important to revisit the Federal Trademark 
Dilution statute to fix certain problems that have become 
apparent through its eight-and-a-half years of experience in 
the courts and its interpretation by the Supreme Court in the 
Mosely case. We advocate in principle three amendments to the 
statute. We advocate these principles as that is the way we 
have discussed them and considered them and made them ABA 
policy. We have not formulated ABA policy on the actual 
specific language of the proposed draft and the committee 
print. We would be happy to work with the Subcommittee, 
however, in connection with language questions.
    We advocate, first, creating a likelihood of dilution 
standard for adjudicating dilution cases under the Federal 
statute in both the courts and the Trademark Trial and Appeal 
Board.
    Secondly, we advocate an amendment allowing famous marks 
that have acquired their distinctiveness through use and 
recognition to be eligible for protection against dilution 
instead of the more restrictive category of inherently 
distinctive marks, as suggested by the minority view in the 
Second Circuit and as suggested by possible dicta in the 
Supreme Court.
    And three, we recommend amending the statute to expressly 
include dilution by tarnishment as being actionable under the 
statute.
    We believe these amendments are consistent with the intent 
of the Federal Trademark Dilution Act and are necessary to 
allow the statute to function properly. I will talk about them 
in a little more detail and also comment on the niche market 
fame issue, which we believe is not quite ripe for a 
legislative solution.
    First, likelihood of dilution. The Supreme Court's decision 
in Mosely requiring actual dilution has created a lot of 
uncertainty and unpredictability in the lower courts as they 
struggle with the quantum of proof and type of trial evidence 
necessary to establish actual dilution. The actual dilution 
standard is unworkable in practice and essentially guts the 
trademark dilution statute. We believe it should be amended to 
provide that cases of trademark dilution should uniformly be 
decided under the likelihood of dilution standard.
    The Court in Mosely even recognized when it was making its 
decision that it was creating problems of proof and stated in 
the course of its opinion, ``whatever difficulties of proof may 
be entailed, they are not an acceptable reason for dispensing 
with proof of an essential element of a statutory violation,'' 
as it referred to actual dilution.
    But the Mosely case has created problems of proof and a 
complicated kind of bifurcated standard or system for dealing 
with cases where the marks are identical or the marks are not 
identical or the marks are almost identical. Unless the 
parties' marks are identical, post-Mosely actual dilution 
opinions almost uniformly have dismissed dilution claims due to 
the absence of sufficient evidence under the Mosely standard, 
although there is no uniform view as to what that type of 
evidence would be.
    Judge Posner in the Seventh Circuit decision of Ty, Inc. v. 
Softbelly's, involving the Beanie Babies company, expressed 
great skepticism even of survey evidence in providing actual 
dilution, which is quite telling as to the difficulties of 
proof that the Mosely standard has created, because survey 
evidence is traditionally one of the most classic and most 
persuasive and most informative forms of trial evidence that 
trademark lawyers utilize in both prosecuting and defending 
against trademark claims of various sorts.
    Mosely has even divided the courts on protecting identical 
marks. Its comments have been interpreted in a couple of 
different ways. The court said it may be that direct evidence 
of dilution, such as surveys, will not be necessary if actual 
dilution can be proven through circumstantial evidence. The 
obvious case is one where the junior and senior marks are 
identical. Well, this has been interpreted as where the junior 
and senior marks are identical, the fact that the identity is 
in itself sufficient to prove dilution. In other cases, the 
courts say, well, when the marks are identical, additional 
evidence is still necessary, but it can be circumstantial as 
well as direct.
    Mosely also divides the Trademark Trial and Appeal Board 
from the district courts in dealing with dilution cases under 
the Federal Act. In the Trademark Board, oppositions can be 
filed against intent-based applications where there is no use 
of the mark yet and, therefore, by definition, the use of the 
mark, the proposed use of the mark has to be deemed likely to 
cause dilution if the opposition is on the dilution ground. We 
believe that a uniform standard should be set to even out these 
inconsistencies.
    We believe a likelihood of dilution standard is consistent 
with the First Amendment. We endorse the continuation of the 
exceptions, the defenses that are stated for proper areas of 
use. Nobody really has been using, in our view, the dilution 
statute as it presently exists to stifle free speech, and 
frankly, a likelihood of dilution standard has been in place 
under the State dilution statutes which exist for many, many 
years and we don't believe that there has been empirical 
evidence of the erosion of First Amendment rights as a result 
of that.
    In conclusion, we believe a likelihood of dilution standard 
should be adopted. If the status quo remains, the Federal 
Trademark Dilution Act will not be an effective means of 
protecting famous marks.
    Second, briefly on acquired distinctiveness. As I mentioned 
earlier, there are two kinds of----
    Mr. Smith. Mr. Sacoff, maybe we can get to that during the 
question and answer period, since we are out of time.
    Mr. Sacoff. I will be happy to do that, and will rely upon 
our written statement for the remainder of our detail.
    Mr. Smith. Very good. Thank you, Mr. Sacoff.
    [The prepared statement of Mr. Sacoff follows:]

                 Prepared Statement of Robert W. Sacoff

    Mr. Chairman and members of the Subcommittee:
    Thank you for the opportunity to testify on behalf of the American 
Bar Association and that Association's Section of Intellectual Property 
Law. My name is Robert W. Sacoff. I am a partner in the law firm of 
Pattishall, McAuliffe, Newbury, Hilliard & Geraldson, and I currently 
serve as Chair of the ABA Section of Intellectual Property Law. The 
views that I express supporting amendment of the Federal Trademark 
Dilution Act of 1995 (the ``FDTA'') to provide that questions of 
trademark dilution should be resolved under the ``likelihood of 
dilution'' standard have been adopted as ABA policy by our Board of 
Governors, and therefore represent views of the Association. Views 
expressed on other issues regarding the FDTA have not been approved by 
the House of Delegates or Board of Governors of the Association. Those 
views are those of the Section of Intellectual Property Law (IP Law 
Section) alone.
    The Federal Trademark Dilution Act of 1995 was enacted on January 
16, 1996. After eight years of experience under the Act, it is 
appropriate that Congress revisit the statute to identify areas of 
possible amendment and improvement, and we applaud the Subcommittee for 
initiating that exercise. The Subcommittee has asked the witnesses 
today to consider a number of options for amendment to the FTDA. We 
have done so, and offer three recommendations in this regard and 
general comments on a fourth issue concerning niche market fame.

                           EXECUTIVE SUMMARY

    The Federal Trademark Dilution Act should be amended in three ways: 
(1) creating a ``likelihood of dilution'' standard; (2) providing a 
specific cause of action for dilution by tarnishment; and (3) allowing 
for non-inherently distinctive marks to be eligible for protection. 
These three amendments are consistent with the intent of the FTDA. In 
addition, they are necessary to allow for the statute to function 
properly.
    The Supreme Court's recent decision in Moseley requiring actual 
dilution has led to uncertainty and unpredictability in the lower 
courts as they struggle with the quantum of proof and type of evidence 
necessary to establish actual dilution. The actual dilution standard 
has proven unworkable in practice. There should be no concern about the
    impact this proposed amendment will have on free speech, since 
there is no conflict between the likelihood standard and the First 
Amendment.
    The Moseley decision cast doubt on whether the FTDA creates a cause 
of action for tarnishment. The majority of courts prior to Moseley did 
recognize an anti-tarnishment provision in the FTDA, based on the 
legislative history. Moseley, however, called this into question. 
Therefore, the call for a legislative amendment on this issue is 
understandable, and the ABA IP Law Section supports clarification of 
this matter by an amendment to the FTDA to expressly provide a cause of 
action for dilution by tarnishment.
    Finally, the Second Circuit has added an additional requirement to 
the FTDA, namely that a mark must be inherently distinctive to qualify 
for protection. In other words, under this minority view some of the 
most famous ``supermarks'' (e.g., FORD automobiles, DELL computers) 
might not be eligible for protection under the FTDA even though they 
have acquired massive distinctiveness and fame. This minority position 
therefore precludes the owners of some famous marks from exercising the 
rights Congress intended to grant them. There is concern that this 
minority position may be followed by more courts because the Moseley 
decision, in dicta, made comments that could be interpreted to support 
the Second Circuit's view.
    Unlike the above issues, there is no consensus in the trademark law 
community as to whether the FTDA currently protects marks that have 
acquired niche fame or should protect such marks. Thus, a legislative 
amendment is not appropriate at this time.

                   I. LIKELIHOOD OF DILUTION STANDARD

    The Federal Trademark Dilution Act should be amended to provide 
that cases of trademark dilution before the federal courts and 
Trademark Trial and Appeal Board of the USPTO should be uniformly 
decided under the ``likelihood of dilution'' standard. Our analysis of 
the FTDA leads us to the conclusion that the likelihood of dilution 
standard is not only preferable, but clearly is what Congress intended. 
Nonetheless, in light of the Supreme Court's decision in Moseley v. V. 
Secret Catalogue, Inc., an amendment to the FTDA is now needed to 
provide ``likelihood of dilution'' as the standard.

A. Moseley v. V. Secret Catalogue, Inc.
    In Moseley v. V. Secret Catalogue, Inc., 123 S. Ct. 1115 (2003), 
the Supreme Court held that the text of the FTDA ``unambiguously 
requires a showing of actual dilution, rather than a likelihood of 
dilution.'' Id., 123 S. Ct. at 1124. The Court went on to state ``that 
does not mean that the consequences of dilution, such as an actual lost 
of sales or profits, must also be proved. . . . [A]t least where the 
marks 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.'' Id., 123 S. Ct. at 1124. Further, 
the Court said, ``direct evidence of dilution such as consumer surveys 
will not be necessary if actual dilution can reliably can be proven 
through circumstantial evidence--the obvious case is one where the 
junior and senior marks are identical. Whatever difficulties of proof 
may be entailed, they are not an acceptable reason for dispensing with 
proof of an essential element of a statutory violation.'' Id., 123 S. 
Ct. at 1125. Illustrative cases are reviewed below.

B. Problems Of Proof Created By Moseley
    The Supreme Court's ``actual dilution'' standard in Moseley has 
become an incredibly difficult criterion by which to measure adequate 
proof of dilution. Unless the parties' marks were identical, post-
Moseley ``actual dilution'' opinions almost uniformly have dismissed 
dilution claims due to the absence of sufficient evidence under the 
Moseley standard. Even in cases where the parties' marks were 
identical, the Moseley decision has been interpreted by some courts as 
requiring ``extra'' burdens of proof. So that otherwise qualifying 
famous marks can be given the proper scope of protection intended by 
Congress, the FTDA should be revised to expressly include a 
``likelihood of dilution'' standard.
    Ty, Inc. v. Softbelly's, Inc., No. 03-1592, 2003 WL 22994564 (7th 
Cir. Dec. 22, 2003): Although the ``actual dilution'' discussion is 
quite brief, this decision contains language that casts some doubt on 
consumer surveys as proof of dilution. In an opinion written by Judge 
Posner, the Seventh Circuit reversed judgment as a matter of law for 
the manufacturer of ``Beanie Babies'' in a trademark infringement and 
dilution case against the manufacturer of ``Screenie Beanies,'' small, 
plush, stuffed animals sold in computer stores for use in wiping 
computer screens. See Softbelly's, 2003 WL 22994564 at *1. On the 
dilution claim, the Court held that the district court's ruling for Ty 
``had scant grounding in the evidence.'' Id. at *6. Indeed, the Court 
found that ``no evidence of any sort was presented that would have 
enabled a trier of fact to infer any lessening in the capacity of 
`Beanies' or `Beanie Babies' to `identify and distinguish' the plush 
beanbag animals sold by Ty'' and remanded for a new trial on the issue. 
Id. at *6-7, citing Moseley, 123 S. Ct. 1115 (2003).
    Judge Posner noted that Moseley ``impl[ied] a need for trial-type 
evidence'' to determine whether dilution had occurred. Id. at *6. 
Commenting indirectly on the Supreme Court's reference to consumer 
surveys as direct evidence of actual dilution Moseley, 123 S. Ct. at 
1125, Judge Posner expressed his skepticism that any ``question could 
be put to consumers that would elicit a meaningful answer either in 
that case or this one.'' Id., (citing Jonathan Moskin, ``Victoria's Big 
Secret: Whither Dilution Under the Federal Dilution Act?'', 93 
Trademark Rep. 842, 853 (2003)). Regarding the suggestion that 
circumstantial evidence might be sufficient to prove actual dilution 
where the disputed marks were identical, Moseley, 123 S. Ct. at 1125, 
Judge Posner somewhat acerbically observed that the Supreme Court ``did 
not explain and no one seems to know what that `circumstantial 
evidence' might be.'' \1\ Id. at *7.
---------------------------------------------------------------------------
    \1\ Judge Posner's skepticism on this point notwithstanding, 
several district courts have found actual dilution, on various 
showings, when the marks at issue were identical. See Savin Corp. v. 
The Savin Group, No. 02 Civ.9377 SAS, 2003 WL 22451731, *14-*15 
(S.D.N.Y. Oct. 24, 2003); Scott Fetzer Co. v. Gehring, 288 F.Supp.2d 
696, 2003 WL 22429698, *5 (E.D.Pa. Sept. 23, 2003); Nike Inc. v. 
Variety Wholesalers, Inc., 274 F.Supp.2d 1352, 1372 (S.D.Ga. 2003); 
Four Seasons Hotels and Resorts B.V. v. Consorcio Barr, S.A., 267 
F.Supp.2d 1268 (S.D.Fla. 2003); and Pinehurst, Inc. v. Wick, 256 
F.Supp.2d 424, 431-432 (M.D.N.C. 2003), discussed below. In the case at 
bar, as Judge Posner noted, neither ``Beanies'' nor ``Beanie Babies'' 
were identical to ``Screenie Beanies.'' See Softbelly's, 2003 WL 
22994564 at *7.
---------------------------------------------------------------------------
    Caterpillar Inc. v. Walt Disney Co., 287 F. Supp. 2d 913, 922, 
(C.D. Ill. 2003): The court began its treatment of dilution by noting 
that Moseley and its actual dilution requirement pertained only to 
blurring and, in the case at bar, Caterpillar did not argue blurring, 
but rather tarnishment. See Caterpillar, 287 F.Supp.2d at 921-922. The 
court noted Moseley left open the question of whether tarnishment fell 
within the scope of the FTDA. Id. at 922. Assuming that actual dilution 
must be shown for tarnishment cases, the court further observed, ``it 
is unclear what type of showing Caterpillar must make,'' although it is 
clear that Caterpillar need not prove loss of sales of profits nor by 
direct evidence such as a consumer survey, but may rely on 
circumstantial evidence. Id. (citing Moseley, 123 S. Ct. at 1124). 
Because Disney's movie had not yet been released, there was nothing in 
the record to suggest that Caterpillar had lost sales or profits, nor 
any consumer survey evidence showing actual dilution. See, Id. 
Accordingly, there was nothing in the record to show that Caterpillar 
was likely to succeed on its dilution claim and therefore no basis to 
support its request for a TRO. See, Id.
    Although the court does not spell this out, presumably 
circumstantial evidence would be sufficient because the marks that 
Disney used in its movie were ``identical,'' indeed, were Caterpillar's 
own mark. It may be inferred that, because the court did not hold that 
the ``identity'' of the marks was sufficient in itself to prove 
dilution, the court was siding with the ``identity plus'' line of post-
Moseley decisions, although the lack of any discussion or analysis on 
this point makes this inference speculative at best.
    Kellogg Co. v. Toucan Golf, Inc., 337 F.3d 616 (6th Cir. 2003): 
This case began when Kellogg opposed registration of the word mark 
``Toucan Gold'' for use in connection with golf clubs and golf putters. 
(Defendant Toucan Golf was a manufacturer of golf equipment for sale 
primarily to companies who used the clubs as promotional gifts at 
charity events.) See Toucan Golf, 337 F.3d at 620-621. In appealing the 
decision of the Trademark Trial and Appeal Board (``TTAB'') permitting 
the registration to the federal district court, Kellogg claimed that 
the word mark and an unregistered cartoon toucan logo used by Toucan 
Golf infringed and diluted Kellogg's famous Toucan Sam design and word 
marks. Id. at 622. Rejecting both claims, the district court and the 
Sixth Circuit Court of Appeals affirmed the TTAB's decision.
    As the Sixth Circuit interpreted Moseley, the Supreme Court held 
that Plaintiff V. Secret's dilution claim failed because it ``did not 
present any empirical evidence that consumers no longer clearly 
understood to which products the `Victoria's Secret' mark was related, 
and thus failed to demonstrate the `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.' '' Id. 
at 628 (citing Moseley, 123 S.Ct. at 1125) (emphasis added). Similarly, 
the Sixth Circuit found, Kellogg presented no evidence that Toucan 
Golf's use of its toucan marks ``has caused consumers no longer to 
recognize that Toucan Sam represents only Froot Loops'' or that ``any 
segment of the population recognizes Toucan Sam as the spokesbird only 
for Froot Loops in lesser numbers than it did before TGI started using 
its toucan marks.'' Id. (emphases added). Indeed, the court emphasized, 
Kellogg presented one survey conducted in 1991 that showed 94% of 
children recognized Toucan Sam and 81% related him to Froot Loops and 
another from 1997, after Toucan Golf started business, that showed 94% 
recognition of Toucan Sam among adults. Id.
    The Sixth Circuit's opinion is problematic on several levels, and 
demonstrates a potentially far-reaching implication of the Supreme 
Court's Moseley decision. Moseley nowhere articulated the ``no longer 
clearly understood'' standard that the Sixth Circuit invoked, and the 
Court cited no authority in case law, statute, or legislative history 
in support of it. The Sixth Circuit thus gave no real parameters to the 
standard. For example, what percentage showing in a consumer survey 
would suffice to prove dilution? What would be the relevant universe 
and the relevant time frame for such a survey? How would causation be 
proven? And how would factors like market conditions and general 
consumer preferences be treated in the survey analysis? (Of course, the 
latter is a fundamental flaw in the actual dilution standard itself, 
which the Second Circuit emphasized in Nabisco, Inc. v. PF Brands, 
Inc., 191 F.3d. 208 (2nd Cir. 1999), and which the Moseley Court failed 
to address.)
    Practically speaking, Toucan Golf presents strategic dilemmas for 
dilution claimants and litigators. The surveys that the Sixth Circuit 
relied upon to reject Kellogg's dilution claim were presented as 
evidence of Toucan Sam's strength and fame. Id. at 624 (noting that 
Kellogg presented the 1991 survey in support of ``the strength of its 
Toucan Sam marks''). The 1997 survey the Court relied upon also was 
submitted to demonstrate fame; was a survey of a different universe 
(adults, not children); and was conducted after Toucan Golf had begun 
business but before the Toucan Gold mark was used in commerce. Id. at 
624 (noting that Toucan Golf's application for ``Toucan Gold'' was an 
``intent to use'' application) and 628. Nevertheless, the Sixth Circuit 
apparently based its conclusion that Kellogg had failed to prove any 
erosion in consumer recognition of its marks on that second survey.
    While the Sixth Circuit's standard is quite amorphous, dilution 
claimants seeking to rely on survey evidence in that jurisdiction may 
need to have conducted a fame survey before the junior mark was 
introduced and then another (using the same survey instrument?) at some 
point thereafter, and the results will have to show erosion in consumer 
recognition of some uncertain amount. If, for example, a senior mark 
holder discovers a purportedly diluting use within the statute of 
limitations, but has not conducted a pre-use survey, Toucan Golf could 
be read to suggest the senior user may be unable to prove actual 
dilution for lack of a pre-junior-mark benchmark survey. However, such 
surveys, aside from their cost, present the danger of being used in 
litigation against claimants by alleged diluters, if they do not 
demonstrate erosion in consumer recognition.

C. Moseley's Divisive Impact On The Issue Of Protecting Identical Marks
    In Moseley, the Supreme Court stated a dictum touching on the 
situation where the disputed marks in a dilution claim are identical: 
``It may be, however, that direct evidence of dilution such as consumer 
surveys will not be necessary if actual dilution can reliably be proven 
through circumstantial evidence--the obvious case is one where the 
junior and senior marks are identical.'' Moseley, 123 S. Ct. at 1125. 
The statement has given rise to several decisions and a split of 
authority among the lower courts.
    Savin Corp. v. The Savin Group, No. 02 Civ.9377 SAS, 2003 WL 
22451731, (S.D.N.Y. Oct. 24, 2003): As Judge Scheindlin of the Southern 
District of New York observed, the Moseley's Court's statement is 
subject to at least two different readings: (1) When the junior and 
senior marks are identical, the fact of the identity is in itself 
``sufficient circumstantial evidences to prove actual dilution.'' Or, 
(2) when the marks are identical, circumstantial evidence as opposed to 
direct evidence may prove dilution. See Savin Group, 2003 WL 22451731 
at *14, citing Nike Inc. v. Variety Wholesalers, Inc., 274 F.Supp.2d 
1352, 1372 (S.D.Ga. 2003) and Pinehurst, Inc. v. Wick, 256 F.Supp.2d 
424, 431-432 (M.D.N.C. 2003), respectively.
    In Savin Group, a dispute over identical marks of plaintiff office 
services company and defendant professional engineering consultants, 
the court found the second interpretation more plausible. Id. at *1-*2, 
*14-*15. Judge Scheindlin emphasized the sentence that followed the 
dictum in Moseley: ``Whatever difficulties of proof may be entailed, 
they are not an acceptable reason for dispensing with proof of an 
essential element of a statutory violation.'' Id. at *15, quoting 123 
S. Ct. at 1125. In other words, as Judge Scheindlin read the passage, 
even when the marks are identical, additional proof of actual dilution 
is required; the simple fact of identity does not suffice. Accordingly, 
because plaintiff in the case at bar offered no proof beyond the 
identity of the marks, it ``failed to raise a material issue of fact 
with regard to an essential prong of the dilution test,'' warranting 
summary judgment for defendant. Id.
    HBP, Inc. v. American Marine Holdings, Inc., No. 6:02-CV-957-
ORL22DAB, 2003 WL 22593589, (M.D.Fla. Oct. 10, 2003): The identical 
mark at issue in this case was ``Daytona,'' used by plaintiff HBP as a 
trade and service mark for stock car and motorcycle races and by the 
defendant boat manufacturer for a line of recreational powerboats. Id. 
at *2-3. Granting summary judgment for American Marine on the dilution 
claim, the court first found that HBP's mark was not famous for 
dilution purposes. See American Marine, 2003 WL 22593589 at *2-*3. The 
court found further that, even if HBP's mark was famous, HBP had failed 
to prove actual dilution under Moseley. The court pointed, in part, to 
the lack of evidence ``demonstrating that [HBP's] customers and 
potential customers have, as a result of American Marine's use of the 
`Daytona' mark on its boats, formed any different impression of HBP's 
products and services.'' Id. at *16. (Although this resembles 
``tarnishment'' language, only dilution by blurring was at issue in the 
case and the court's supporting citation to Mead Data Central, Inc. v. 
Toyota Motor Sales, U.S.A., Inc., 875 F.2d 1026, 1029 (2d Cir. 1989), 
suggests that blurring was what it had in mind.)
    There was an interesting procedural misstep in this case. HBP 
offered into evidence excerpts from a deposition transcript that it 
contended showed American Marine's use of the ``Daytona'' mark had 
caused loss of licensing revenue and dilution of existing royalty 
value. Id. at *15. The opinion gives the deponent's name (Glenn 
Padgett), but does not identify who he was or what relationship he had 
to either of the parties. The court did not consider this evidence, 
however, because HBP had failed to file the deposition transcript as 
part of the record before the Court. Id. This is unfortunate, because 
it leads to intriguing speculation of just how Mr. Padgett purportedly 
demonstrated loss of licensing revenue and what the court's findings 
might have been had the evidence been admitted.
    Scott Fetzer C.  v. Gehring, 288 F.Supp.2d 696 (E.D. Pa. 2003): 
This is one of the opinions in which the court held that the identity 
of the marks was, in and of itself, sufficient circumstantial evidence 
to prove dilution, although it did point to other circumstantial 
evidence supporting its finding. See Scott Fetzer, 288 F. Supp. 2d at 
702. Plaintiff was the parent company of a vacuum cleaner business that 
had used the famous Kirby trademark since 1930. Id. at 700. Defendant 
ran a vacuum cleaner store and repair business that widely used the 
Kirby mark in its advertisements, including in the store's name--
``Kirby Vacuum Sales & Service,'' despite not being authorized to use 
the mark or to sell or service Kirby vacuum cleaners. Id.
    In holding that defendant's use of the Kirby trademark ``lowered 
the value and esteem of plaintiff's mark,'' the court reasoned that 
``where the competing entities are using marks that are identical, 
dilution may be reliably found using the circumstantial evidence of the 
identical marks.'' Id. at 701-702; citing Moseley, 123 S. Ct. at 1125. 
In addition to the identity of the marks, the court noted that 
defendant sold second-hand Kirby vacuum cleaners without permission and 
falsely advertised that these machines came with a one-year-
manufacturer's guarantee. Id. at 703 These facts taken together, the 
court concluded, sufficed to prove plaintiff's dilution claim. Id. at 
703.
    Nike Inc. v. Variety Wholesalers, Inc., 274 F.Supp.2d 1352, 1372 
(S.D.Ga. 2003): As in Scott Fetzer, the court in this case concluded 
that identity of the marks was sufficient evidence to prove dilution, 
albeit without any analysis or rationale beyond citing the Moseley 
dictum. While otherwise a complicated case, for dilution purposes the 
facts were simple: Defendant was a low-cost, ``secondary market'' 
clothing retail chain, which plaintiff proved was selling counterfeit 
Nike products. See Variety Wholesalers, 274 F.Supp.2d at 1355, 1357. 
The court concluded that Variety Wholesalers had diluted Nike's famous 
trademarks ``due to the identical or virtually identical character of 
the marks on the Accused Goods to the Nike trademarks.'' Id. at 1372 
(citing Moseley, 123 S.Ct. at 1125) (emphasis added).
    Four Seasons Hotels and Resorts B.V. v. Consorcio Barr, S.A., 267 
F.Supp.2d 1268 (S.D. Fla. 2003): At issue was a complex dispute between 
a licensor and licensee involving breach of contract, claims of 
industrial espionage and trademark issues. Four Seasons, the famous 
luxury hotel chain, had contracted with Consorcio Barr to build and 
operate the Four Seasons hotel in Caracas, Venezuela, and licensed 
defendant to use its brand name, trademarks, and logo for that purpose. 
See Consorcio Barr, 267 F.Supp.2d at 1271-1272. However, the 
relationship was plagued with problems from the beginning. Consorcio 
failed to open the hotel on time; important facilities including 
suites, the poolside restaurant, and the spa were not completed at the 
hotel's opening; there was no sign in front of the hotel; hotel 
employees lacked the required uniforms; many vital operational 
functions were not in place, such as hotel bank accounts; and some 
rooms were furnished with rented furniture not up to Four Seasons' 
quality standards. See Id. at 1275. In addition, pertinent to the 
trademark claims, Consorcio's marketing materials for the residential 
apartments used Four Seasons' marks, an unauthorized use, the materials 
were not approved by Four Seasons, as required by the license, and the 
materials did not comply with Four Seasons' quality standards. See Id. 
at 1309-1310.
    These facts, the court held, provided evidence of actual dilution. 
The court based this finding on the recognized duty and right of 
trademark licensors to police the use of the marks it licenses and the 
quality of the goods they are used on: ``The licensor owes an 
affirmative duty to the public to assure that in the hands of his 
licensee the trademark continues to represent that which it purports to 
represent.'' Id. at 1327 (quoting Siegel v. Chicken Delight, Inc., 448 
F.2d 43, 51 (9th Cir. 1971)). Accordingly, as Professor McCarthy 
concludes, a trademark licensor has an affirmative duty under the 
Lanham Act ``to control the quality of goods and services which reach 
buyers under the licensed mark.'' Id., citing 2 McCarthy on Trademarks, 
Sec. 18:50 (4th ed. 2003). Moreover, ``'[d]istribution of a product 
that does not meet the trademark holder's quality control standards may 
result in the devaluation of the mark by tarnishing its image.' '' Id. 
at 1328 (quoting Warner-Lambert Co. v. Northside Dev. Corp., 86 F.3d 3, 
6 (2d Cir. 1996)).
    Consorcio did not maintain Four Seasons quality standards, leading 
to a likelihood of consumer confusion ``as to Four Seasons' approval of 
such use . . .'' Id. at 1330. In addition to infringement, the court 
held that these facts supported a finding of dilution: ``Consorcio's 
failure to comply with the quality control standards of the License 
Agreement diminished the capacity of the mark to distinguish the high 
quality of Plaintiffs' services.'' Id. at 1332. In addition, consumer 
complaints that the Caracas hotel ``'wasn't a Four Seasons' due to its 
substandard nature, incomplete construction and inferior furnishings 
and finishings'' constituted ``evidence of actual harm'' sufficient to 
establish dilution. Id.
    Again, as in several of the post-Moseley decisions, this case 
concerned identical marks, although, perhaps because the context was 
that of licensor-licensee, the court made no particular note of the 
identity factor. However, the Court did appear to side with the 
``additional-circumstantial-evidence'' school. The ``plus'' factors 
here were the licensee's failure to comply with the licensor's express 
quality control standards and the use of the mark on substandard, 
inferior services. In a footnote, the court suggested that the focus of 
the inquiry was whether customers ``form a`different impression' of the 
goods or services of the senior user.'' Id. at 1332, n. 8 (citing 
Moseley, 123 S.Ct. at 1124). This was how this court seemed to 
understand Moseley's rejection of the sufficiency of ``mental 
association'' between the disputed marks to support a finding of 
dilution under the Federal Trademark Dilution Act (``FTDA'').
    Pinehurst, Inc. v. Wick, 256 F.Supp.2d 424 (M.D.N.C. 2003): This 
was a classic cybersquatting case, with the court also finding actual 
dilution. In 1999, defendants registered 3,000 to 4,000 domain names 
that were confusingly similar to some of the most famous marks in 
America, including those of about 7% of Fortune 500 company names. See 
Wick, 256 F.Supp.2d at 426. Defendants then sold a number of their 
registered domain names to companies that contacted them requesting to 
purchase the company's domain name. Id. Plaintiff, owner of the famous 
Pinehurst Golf Resort and Pinehurst No. 2 golf course, instead sued 
defendants over their registration of the domain names 
``PinehurstResort.com'' and ``PinehurstResorts.com'' under the 
Anticybersquatting Consumer Protection Act (``ACPA''), 15 U.S.C. 
section 1125(d), and the FTDA, 15 U.S.C. section 1125(c). See id. at 
426-427. Pinehurst prevailed on both claims and obtained a permanent 
injunction and statutory damages in the amount of $100,000, plus 
attorneys' fees and costs. See id. at 433.
    Although the Variety Wholesalers court relied on this decision in 
support of its conclusion that identity of the disputed marks 
established dilution, see 274 F.Supp.2d at 1372, Wick is better 
characterized as an ``identity plus'' decision, as Judge Scheindlin 
noted in Savin Group, 2003 WL 22451731 at *14. The plus factor in Wick 
arose from the unique role trademarks serve in Internet domain names: 
``A customer using the Internet will be unable to discern any 
appreciable difference between Defendants' domain names and Plaintiff's 
marks,'' id. at 432, which reduced the value of that mark in two ways: 
Wick's registration of Pinehurst's marks as domain names prevented 
Pinehurst from engaging in electronic commerce using its own marks. See 
Wick, 256 F.Suppp.2d at 431. In addition, the economic value of 
Pinehurst's marks was reduced because customers, unable to locate 
Pinehurst's website and services using domain names identical to its 
registered marks, ``'may fail to continue to search for [P]laintiff's 
own home page due to anger, frustration, or the belief that 
[P]laintiff's home page does note exist.' '' Id. (quoting PETA v. 
Doughney, 263 F.3d 359, 365 (4th Cir. 2001)). The Wick court's 
reasoning gives holders of famous marks battling cybersquatters 
persuasive arguments in support of finding trademark dilution under the 
FTDA in addition to stating claims under the ACPA. Nevertheless, the 
status of these arguments is questionable at best. The Wick court 
relied heavily on Panavision Int'l. L.P. v. Toeppen, 141 F.3d 1316 (9th 
Cir. 1998). Thus, the uncertainty caused by the Moseley decision has 
left some courts relying on questionable and outdated precedents.
    Golden West Financial v. WMA Mortgage Services, No. C 02-05727 CRB, 
2003 WL 1343019 (N.D.Cal. March 13, 2003): In contrast, Judge Breyer in 
this case found no dilution, in part because plaintiffs could not prove 
that defendants' use of nearly identical marks had or would prevent any 
customers from succeeding in contacting them. See Golden West 
Financial, 2003 WL 1343019 at *8. In dispute were plaintiffs' ``World 
Savings and Loan,'' ``World Mortgage'' and related marks for financial 
services allegedly infringed and diluted by defendants' ``World Lending 
Group'' service mark for financial services. Id. at *1. Even were 
plaintiffs' marks famous, which the court found they were not, there 
was no evidence in the case that defendants' use of its ``World'' mark 
had diluted plaintiffs' marks. See id. at *8. To the contrary, the 
court noted, plaintiffs in 2002 had nearly $65 million in assets and 
its profits were a record. Id. In addition, unlike in the Ninth 
Circuit's seminal cybersquatting decision, Panavision Int'l, L.P. v. 
Toeppen, 141 F.3d 1316, 1327 (9th Cir. 1998), ``the use of the 
term`World' in defendants' company names has not decreased the value of 
plaintiffs' trademark because plaintiffs' customers can easily 
recognize and contact them.'' Id.

D. Divergence Between TTAB And Case Law Precedent
    The Trademark Trial and Appeal Board recently held that the 
likelihood of dilution standard still applies to such applications 
rather than the actual-dilution standard. See The Nasdaq Stock Market, 
Inc. v. Antartica, S.R.L., Opposition No. 91121204 to Application 
Serial No. 75/546,122, 2003 WL 22021943, *19-*23 (TTAB June 30, 2003). 
Thus, the Moseley decision has created a split in the way the FTDA is 
applied. Federal courts use the actual dilution standard while the TTAB 
arguably still uses the likelihood of dilution standard. Uniformity in 
application is necessary for the healthy development of the law and to 
allow for predictability and certainty.

E.  A Likelihood Of Dilution Standard Is Consistent With The First 
        Amendment
    Courts have been successfully accommodating First Amendment 
concerns within the Lanham Act. See, e.g., Mattel, Inc., v. Walking 
Mountain Productions, 2003 WL 23018285 (9th Cir. Dec. 29, 2003) 
(finding defendant's expressive commercial use protected after 
balancing the Lanham Act and the First Amendment). See generally 
Kournikova v. General Media Communications Inc., 278 F.Supp.2d 1111, 
1128 (C.D. Cal. 2003) (noting that ``Courts have placed limits on 
Lanham Act lawsuits because of the potential impact on First Amendment 
rights''). Thus, any concern about encroaching on free speech rights is 
historically unsupported.
    Moreover, the FTDA explicitly provides for several exceptions to 
liability that alleviate potential tension with the First Amendment: 
``(A) 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; (B) Noncommercial use of a 
mark; (C) All forms of news reporting and news commentary.'' 15 U.S.C. 
Sec. 1125(c)(4). In applying these exceptions, courts have construed 
the ``noncommercial use'' provision broadly to ensure no First 
Amendment problems. See, e.g., Mattel, Inc. v. MCA Records, 293 F.3d 
894 (9th Cir. 2002) (holding that a music group's song that lampooned 
toy manufacturer's doll fell under non commercial use exception in 
FTDA). In addition, commercial speech is protected by the First 
Amendment and thus a court could not avoid a First Amendment analysis. 
See, e.g., Virginia Board of Pharmacy v. Virginia Citizens Consumer 
Counsel, 425 U.S. 765 (1976).
    There is no reason to believe that including a likelihood standard 
significantly changes the approach courts will take in balancing First 
Amendment concerns, the likelihood standard has dominated state law 
dilution statutes for decades. The 1964 United States Trademark 
Association Model State Trademark Bill establishes liability for 
``[l]ikelihood of injury to business reputation or of dilution of the 
distinctive quality of the mark.'' This standard has not led to a 
progressive encroachment on free speech rights. See, e.g., L.L. Bean, 
Inc. v. Drake Publishers, Inc., 811 F.2d 26 (1st Cir. 1987) (holding 
that the state law likelihood of dilution statute could not be applied 
to prohibit a tarnishing parody because doing so would offend the First 
Amendment).

F. Conclusion
    Amending the FTDA to incorporate a likelihood of dilution standard 
will solve a host of problems created by the Moseley decision. If the 
status quo remains, the FTDA will not be an effective means of 
protecting famous marks.

                      II. TARNISHMENT IN THE FTDA

    The FTDA should be amended to include a specific cause of action 
for tarnishment because the Supreme Court in Moseley cast doubt on its 
existence in the FTDA even though the legislative history for the Act 
indicates Congress intended for there to be one and other case law 
recognized the cause of action.

A. FTDA Legislative History Refers To Tarnishment
    The Supreme Court in Moseley provided the following concise summary 
of the legislative effort leading to the passage of the FTDA and the 
intent that the FTDA cover tarnishment:

        On July 19, 1995, the Subcommittee on Courts and Intellectual 
        Property of the House Judiciary Committee held a 1-day hearing 
        on H.R. 1295. No opposition to the bill was voiced at the 
        hearing and, with one minor amendment that extended protection 
        to unregistered as well as registered marks, the subcommittee 
        endorsed the bill and it passed the House unanimously. The 
        committee's report stated that the ``purpose of H.R. 1295 is to 
        protect famous trademarks from subsequent uses that blur the 
        distinctiveness of the mark or tarnish or disparage it, even in 
        the absence of a likelihood of confusion.'' H.R. Rep. No. 104-
        374, p. 1029 (1995). As examples of dilution, it stated that 
        ``the use of DUPONT shoes, BUICK aspirin, and KODAK pianos 
        would be actionable under this legislation.'' Id. at 1030. In 
        the Senate an identical bill, S. 1513, 104th Cong., 1st Sess., 
        was introduced on December 29, 1995, and passed on the same day 
        by voice vote without any hearings. In his explanation of the 
        bill, Senator Hatch also stated that it was intended ``to 
        protect famous trademarks from subsequent uses that blur the 
        distinctiveness of the mark or tarnish or disparage it,'' and 
        referred to the Dupont Shoes, Buick aspirin, and Kodak piano 
        examples, as well as to the Schechter law review article. 141 
        Cong. Rec. 38559-38561 (1995).

Moseley, 123 S. Ct. at 1123 (emphasis added).
    Despite these statements that the legislation was intended to cover 
tarnishment claims, the Court was not persuaded that the statutory 
language accomplished this purpose because the statute did not include 
specific language regarding tarnishment, such as ``injury to business 
reputation.'' Thus the Court wrote:

        Indeed, the contrast between the state statutes, which 
        expressly refer to both`injury to business reputation' and to 
        dilution of the distinctive quality of a trade name or 
        trademark,' and the federal statute which refers only to the 
        latter, arguably supports a narrower reading of the FTDA.

Moseley, 123 S. Ct. at 1124. In his concurrence in this case, however, 
Justice Kennedy viewed the statute as encompassing both blurring and 
tarnishment. See id. at 1126; See also Pattishall, Hilliard and Welch, 
Trademarks and Unfair Competition Deskbook Sec. 8.01[2][b] (2d ed. 
2003).
    The primary legislative history of the 1995 Act is House Report 
104-374. The language the Supreme Court quoted from that report is 
probably the best language in support of the proposition that Congress 
intended the FTDA to cover dilution by tarnishment. Additional support 
is found in the ``section by section analysis'' of the proposed bill, 
which states that the definition of dilution ``is designed to encompass 
all forms of dilution recognized by the courts, including dilution by 
blurring, by tarnishment and by disparagement.) H. R. Rep. No. 104-374 
at page 8 (emphasis added).
    Another potential source of legislative history is the testimony 
taken by the Subcommittee on Courts and Intellectual Property on July 
19, 1995. The House Report recites the fact the Committee received the 
testimony and the identity of the witnesses, but the substance of that 
testimony is not part of the actual Report. See Id. at p. 5. Still, 
that testimony itself provides a nearly unanimous view that the 
proposed law would cover both blurring and tarnishment. See, e.g., 
Testimony of Mary Ann Alford, the Executive Vice President of INTA 
(``This definition [of dilution in the proposed statute] encompasses 
both dilution by blurring and dilution by tarnishment. It is also 
elastic enough to encompass future, currently unforeseen, factual 
situations that may give rise to liability.'') But see Testimony of 
Jonathan E. Moskin (``H.R. 1295 does not purport to recognize injury 
from uses of a famous trademark that are likely to tarnish the 
reputation of the owner of famous mark. This is one form of injury that 
has been susceptible of proof under state dilution laws independent of 
proof of likelihood of confusion.'')
    In sum, the 1995 legislative history of the FTDA supports the 
conclusion that Congress intended that statute to cover dilution by 
tarnishment. The Supreme Court has raised doubts about whether the 
statutory language accomplishes this purpose.

B. Case Law After The Enactment Of The FTDA Recognized The Existence Of 
        A Specific Cause Of Action For Tarnishment In The Act
    After the enactment of the FTDA and prior to the Moseley decision, 
courts ``have construed the federal dilution statute to protect against 
dilution by tarnishment.'' Pattishall, Hilliard, and Welch, Trademarks 
and Unfair Competition Deskbook Sec. 8.01[2][c] (2d ed. 2003); See also 
Clinique Labs. v. Dep Corp., Inc., 945 F. Supp. 547, 560-62 (S.D.N.Y. 
1996)(Recognizing a cause of action for tarnishment under the FTDA, 
while holding that defendant's BASIQUE skin care products did not 
tarnish plaintiff's CLINIQUE skin care products); Dr. Seuss, Enter. v. 
Penguin Books USA, Inc., 924 F. Supp. 1559, 1573 (S.D. Cal. 1996), 
aff'd, 109 F.3d 1394 (9th Cir.), cert. Dismissed, 521 U.S. 1146 (1997) 
(``The legislative history supports the conclusion that Congress also 
intended the Act to cover dilution through tarnishment''); Anheuser-
Busch v. Andy's Sportswear, 40 U.S.P.Q.2d 1542 (N.D. Cal. 
1996)(BUTTWISER t-shirt dilutes BUDWEISER mark for beer; TRO granted in 
context which makes tarnishment the basis for decision); Ringling 
Bros.-Barnum & Bailey Combined Shows v. B.E. Windows Corp., 937 F. 
Supp. 204, 211(S.D.N.Y. 1996)(Recognizing a cause of action for 
tarnishment under the FTDA, but finding that defendant's GREATEST BAR 
ON EARTH services mark for a night club did not tarnish the 
``wholesome, family oriented image of [plaintiff's ] GREATEST SHOW ON 
EARTH'' mark under the Dilution Act, noting alcohol was served at 
venues where plaintiff's circus performed).

C. Since The Moseley Decision, At Least One Court Has Raised Doubts 
        About The Viability Of Tarnishment Under The FTDA
    Since the Supreme Court issued its Moseley decision on March 4, 
2003, no case squarely has addressed the question of whether the FTDA 
covers dilution by tarnishment, but one opinion specifically notes the 
doubts raised by Moseley on this point.
    In Caterpillar Inc. v. Walt Disney Co., 287 F. Supp. 2d 913, 922 
(C.D. Ill. 2003), the trial court denied plaintiff's request for a 
temporary restraining order in connection with defendant's use of 
Caterpillar bulldozers in the movie ``George of the Jungle 2'' in a 
manner plaintiff found offensive. Plaintiff alleged several claims, 
including a dilution by tarnishment claim under the FTDA. In connection 
with its decision, the court noted the question raised by Moseley of 
``whether tarnishment is within the scope of Sec. 43c.'' The 
Caterpillar court, however, did not decide that issue, instead 
addressing the issue of what Caterpillar was required to prove to show 
``actual dilution.'' Because of the Moseley decision, courts, such as 
the one in Caterpillar, will continue to raise questions about the 
viability of a cause of action for tarnishment under the FTDA. Cf., The 
NASDAQ Stock Market, Inc. v. Antarctica, s.r.l., 2003 TTAB LEXIS 391, 
*67 (citing Moseley, noting: ``state dilution statutes provide that 
tarnishment and blurring are actionable, while FTDA arguably refers 
only to the latter'').

C. Conclusion
    We believe that Congress intended to include dilution by 
tarnishment as well as dilution by blurring in the FTDA, and the Act 
effectively did so. However, dicta in the Moseley decision has raised 
doubts and created uncertainty in this regard. The Section of 
Intellectual Property Law of the American Bar Association supports 
removal of this uncertainly by an amendment to the FTDA to expressly 
include a cause of action for dilution by tarnishment.

                 III. FTDA AND ACQUIRED DISTINCTIVENESS

    The Federal Trademark Dilution Act should be amended to state that 
marks that have acquired distinctiveness from use in the marketplace 
are eligible for dilution protection under the Trademark Act to the 
same extent as marks that are inherently distinctive.
    The FTDA provides that one of the factors for determining whether a 
mark is sufficiently ``distinctive and famous'' to be covered by the 
Act is ``the degree of inherent or acquired distinctiveness of the 
mark.'' 15 U.S.C. Sec. 1125 (c)(i)(A). There is currently a split among 
the Circuits regarding whether a mark is required to be inherently 
distinctive to receive protection under the FTDA. Based on an analysis 
of the case law and the intent behind the FTDA, marks which have merely 
acquired distinctiveness should be eligible for dilution protection. 
Some of the most famous marks in the world are famous but arguably not 
inherently distinctive, such as FORD, DELL, and DUPONT. These should be 
protected under the FTDA. Therefore, the FTDA should be amended to make 
this clear and resolve the divergence in authority among the Circuit 
courts.

A. Cases Requiring Inherent Distinctiveness
Second Circuit
    In TCPIP Holding Company, Inc. v. Haar Communications, Inc., 244 
F.3d 88 (2nd Cir. 2001), the Court of Appeals vacated the lower court's 
ruling that preliminarily enjoined the defendant from using any 
Internet domain names with the mark THE CHILDREN'S PLACE to the extent 
the ruling was based on the FTDA, but affirmed it to the extent the 
ruling was based on any likelihood of confusion. The court stated that 
given the history of the FTDA, ``we conclude that a descriptive mark 
does not come within the protection of the'' FTDA. Id. at 93. The 
court, in interpreting FTDA in a harmonious way with its result, stated 
that it understood the FTDA ``to invite two inquiries: (1) Has the 
plaintiff's mark achieved a sufficient degree of consumer recognition 
(``acquired distinctiveness'') to satisfy the Act's requirement of 
fame? (2) Does the mark possess a sufficient degree of`inherent 
distinctiveness' to satisfy the Act's requirement of`distinctive 
quality.' The latter requirement cannot be satisfied by the mere fact 
that the public has come to associate the mark with the source.'' Id. 
at 98. The court reasoned that in order for a mark to be famous, it 
must acquire some form of distinctiveness, therefore if the criterion 
of distinctiveness was satisfied by the acquired distinctiveness of the 
mark, it would render the criterion of fame meaningless. Therefore, 
only inherently distinctive marks qualify for protection under the 
FTDA.
    In Deere & Company v. MTD Holdings Inc., No. 00 Civ. 5936(LMM), 
2003 WL 22439778 (S.D.N.Y., October 28, 2003), Deere & Company sought 
to amend its complaint regarding a FTDA claim after the district court 
had granted MTD Holdings' motion for dismissal under the Qualitex 
doctrine that color marks require secondary meaning. Deere attempted to 
claim that its specific use of the color green on the body of its 
products and yellow for trim was arbitrary. The court rejected this 
notion and found that the use of two colors still requires proof of 
secondary meaning for protection. The court dismissed the dilution 
claim because the colors yellow and green are not inherently 
distinctive and, citing the TCPIP case, do not qualify for protection 
under the FTDA.
    Malaco Leaf, AB v. Promotion In Motion, Inc., 287 F. Supp. 2d 355 
(S.D.N.Y. 2003): Malaco Leaf brought suit for alleged copying of its 
fish-shaped gummy candy known as the ``Swedish Fish.'' The court held 
that inherent distinctiveness was required under FTDA, and since 
product configuration can never be inherently distinctive under the 
Sumara Bros. case, defendant was entitled to summary judgment on 
plaintiff's FTDA claim.
    Christopher D. Smithers Foundation, Inc. v. St. Luke's-Roosevelt 
Hosp. Center, No. 00 Civ. 5502(WHP), 2003 WL 115234 (S.D.N.Y., Jan 13, 
2003): The Foundation filed an action regarding its marks THE 
CHRISTOPHER D. SMITHERS FOUNDATION, INC., THE CHRISTOPHER D. SMITHERS 
FOUNDATION, THE SMITHERS FOUNDATION, C.D. SMITHERS FOUNDATION, and 
SMITHERSFOUNDATION.ORG. The Hospital operated the Smithers Alcoholism 
Treatment and Training Center. Among the Foundation's claims was one 
under the FTDA. In dismissing the FTDA claim, the court noted that the 
term ``foundation'' and the surname ``Smithers'' are descriptive and, 
citing TCPIP, that such descriptive marks do qualify for protection 
under the FTDA as such terms are not inherently distinctive. ``The FTDA 
differs from traditional trademark law in that it protects a`far 
narrower' class of entities. The FTDA only affords protection to 
inherently distinct marks (i.e. suggestive, arbitrary, fanciful), and 
does not afford protection to descriptive marks that have acquired 
distinctiveness. Thus, the evidence of secondary meaning submitted by 
the Foundation could not save its FTDA claim.'' Id. at *7 (citations 
omitted.)
    Solow Building Company, LLC v. Nine West Group, Inc., No. 01-7878, 
2002 WL 31303237 (2nd Cir. October 11, 2002): In affirming the district 
court's dismissal of plaintiff's complaint, the court held ``that 
Solow's federal trademark dilution claims are also barred on the 
alternative ground that Solow's mark lacks inherent distinctiveness. 
Solow has conceded that its mark is descriptive at best, and this court 
has held that such a mark lacks sufficient distinctiveness to warrant 
protection under the federal trademark dilution statute.'' Id. at *1. 
Plaintiff's mark was a red numeral ``9'' which was nicknamed 9 WEST and 
defendant's mark was ``NINE WEST.''
    New York Stock Exchange, Inc. v. New York, New York Hotel, LLC, 293 
F.3d 550 (2nd Cir. 2002): The Second Circuit affirmed the lower court's 
dismissal of all but one of plaintiff's claims for protection under the 
FTDA because the marks, except for one, were not inherently 
distinctive. Defendant had modified several of the many registered 
marks of plaintiff. Examples of the modified marks include: (i) a 
replica of NYSE's architectural facade that bore the words ``NEW YORK 
NEW YORK SLOT EXCHANGE'' located near the Defendant's gambling floor; 
(ii) the Defendant's ``NEW YORK SLOT EXCHANGE'' or ``NEW YORK-NEW YORK 
SLOT EXCHANGE'' club for frequent gamblers; (iii) sweatshirts, caps, 
and other souvenirs given out by the Defendant to the members of its 
players club displaying the ``NEW YORK SLOT EXCHANGE'' or ``NEW YORK-
NEW YORK SLOT EXCHANGE'' slogan; and (iv) the Defendant's reference to 
its players club by the ``NY'' or ``NY-NY'' abbreviation. The exception 
is a registered logo consisting of Plaintiff's building's facade 
bearing the words ``NEW YORK STOCK EXCHANGE.'' The court followed its 
decision in TCPIP and noted that a trier of fact might find the 
excepted mark inherently distinctive, which would then qualify it for 
FTDA protection.
    GTFM, Inc. v. Solid Clothing, Inc., 215 F. Supp. 2d 273 (S.D.N.Y. 
2002): GTFM, Inc. filed an action based on its marks ``FUBU,'' ``FUBU 
05'' and ``05'' for clothing. Solid Clothing, Inc. had adopted the 
marks ``05'' and then ``PLAYERS 05'' on sports apparel it designed to 
imitate GTFM's marks. In dismissing the FTDA claim, the district court 
cited TCPIP and held that GTFM's marks were not inherently distinctive 
and did not qualify for protection under the FTDA. Id. at 299-300. The 
court also went on to say that the ``05'' mark was not famous either.
    Cline v. 1-888-Plumbing Group, Inc. 146 F. Supp. 2d 351 (S.D.N.Y. 
2001): Plaintiff claimed that its mark 1-800-PLUMBING was being diluted 
by defendant's mark of 1-888-PLUMBING. The district court cited TCPIP 
and denied plaintiff's motion for summary judgment regarding its FTDA 
claim because plaintiff's mark was descriptive and therefore lacked the 
inherent distinctiveness required for protection under the FTDA. Id. at 
361.

B. Cases Not Requiring Inherent Distinctiveness
First Circuit
    I.P. Lund Trading v. Kohler Co., 163 F.3d 27 (1st Cir. 1998). A 
faucet manufacturer brought an action against competitors for dilution 
and infringement of manufacturer's trade dress. In holding that 
Plaintiff's faucet design was not so famous as to warrant protection 
under the FTDA, the court noted, ``There is little to suggest that this 
product design, itself unregistered and not inherently distinctive, is 
so strong a mark and so well publicized and known that it has achieved 
the level of fame Congress intended under the'' FTDA. Id. at 60. The 
court bifurcated the analysis of a mark under the FTDA, holding a mark 
must be distinctive and famous to qualify for protection under the 
FTDA. The court found that a mark may be inherently distinctive or 
acquire sufficient distinctiveness to satisfy the requirement of 
distinctiveness. Id. at 58-60. The mark must also be famous to qualify 
for protection under the FTDA, and inquiry regarding whether or not a 
mark is famous is a separate inquiry.

Third Circuit
    Times Mirror Magazines, Inc. v Las Vegas Sport News, LLC, 212 F.3d 
157 (3rd Cir. 2000): The Third Circuit affirmed the lower court's grant 
of a preliminary injunction under the FTDA to Time Mirror Magazines, 
Inc. owner of the mark THE SPORTING NEWS preventing Las Vegas Sport 
News, LLC from using the mark LAS VEGAS SPORTING NEWS. The court held 
that the mark ``THE SPORTING NEWS'' was not inherently distinctive. 
Therefore, the court must ``examine the degree to which the mark has 
acquired distinctiveness by gaining secondary meaning over time in the 
marketplace.'' Id. at 166. This includes the following considerations: 
``(1) the length or exclusivity of use of the mark; (2) the size or 
prominence of the plaintiff's enterprise; (3) the existence of 
substantial advertising by the plaintiff; (4) established place in the 
market and (5) proof of intentional copying.'' Id. The court found the 
mark had acquired sufficient distinctiveness to warrant protection 
under the FTDA.

Sixth Circuit
    Libbey Glass, Inc. v. Oneida Ltd., 61 F. Supp. 2d 700 (N.D. Ohio 
1999): Plaintiff filed, among other claims, a claim for violation of 
FTDA based on defendants manufacture and sale of ``knock-off'' beverage 
glassware. In rejecting plaintiff's motion for summary judgment, the 
court stated in addressing the requirement of distinctiveness that 
``Libbey's trade dress is not inherently distinctive and there is a 
genuine issue of material fact about whether Libbey's trade dress has 
secondary meaning.'' Id. at 716. This clearly implies that acquired 
distinctiveness is sufficient.

Seventh Circuit
    AM General Corp. v. DaimlerChrysler Corp. 311 F.3d 796 (7th Cir. 
2002): Plaintiff asserted trademark infringement and FTDA claims based 
upon an asserted family of marks in its Jeep grille designs. The court 
recognized that under Traffix, product configurations must acquire 
distinctiveness and secondary meaning to be protectable. The court did 
not reject the FTDA claim on grounds that the alleged family of marks 
was not inherently distinctive, but rather denied a preliminary 
injunction on the FTDA claim because the plaintiff had failed to prove 
that it had rights in the family of marks it was asserting. As a 
result, the marks being asserted certainly could not be famous. Id. at 
818. This suggests that the Seventh Circuit takes the position that 
acquired distinctiveness is sufficient for a FTDA claim. Otherwise the 
court would have stopped when it concluded that the marks were not 
inherently descriptive.
    Ty Inc. v. Perryman, 306 F.3d 509 (7th Cir. 2002), cert. Denied, 
123 S. Ct. 1750 (2003): The mark at issue in this case was BEANIES. The 
court found that the mark clearly was not inherently distinctive. See 
Id. at 513. The court did not reject the FTDA claim on this basis. 
Rather, the court held that an injunction was proper under the FTDA 
claim but only that its scope should be much more limited than 
originally ruled by the district court. Thus, in this case, the Seventh 
Circuit allowed an FTDA claim with a mark that it clearly held to not 
be inherently distinctive.

Ninth Circuit
    Adidas-Salomon AG v. Target Corp., No. CV-01-1582-ST, 2002 WL 
31971831 (D. Or. July 31, 2002): Plaintiff filed an action regarding 
its three stripe mark and Original Superstar trade dress which is for a 
particular style of shoe. Defendant had adopted a four stripe mark and 
similar style of shoe. The magistrate's findings noted there was a 
split in the Circuits regarding the whether or not a mark with acquired 
distinctiveness qualifies for protection under the FTDA and, relying on 
language from Avery Dennison v. Sumpton (see summary below), concluded 
that, in the Ninth Circuit, acquired distinctiveness does qualify. 
Under the Ninth Circuit standard, the court held that there was 
sufficient evidence that the three stripe mark and Original Superstar 
trade dress where distinct and famous to withstand defendant's motion 
for summary judgment.
    Thane International, Inc. v. TREK Bicycle Corporation, 305 F.3d 894 
(9th Cir. 2001): The Ninth Circuit reversed the lower court's grant of 
summary judgment to the defendant because it improperly used a 
likelihood of confusion standard. The court focused on the failure of 
Trek Bicycle to show its mark TREK was famous; the court mingled the 
requirement of fame with the requirement of distinctiveness. In a 
footnote, the court stated ``a mark must have a relatively high degree 
of distinctiveness both to`be capable of being diluted' and to meet 
Sec. 1125(c)(1)'s`threshold element of fame.' A party may satisfy this 
burden with a showing of acquired distinctiveness, rather than inherent 
distinctiveness, but in either case it must demonstrate`a degree of 
distinctiveness beyond that needed to serve as a trademark.' '' Id. at 
912 n.14 (citations omitted).
    Cairns v. Franklin Mint Co., 24 F. Supp. 2d 1013 (C.D. Cal. 1998), 
aff'd, 1999 U.S. App. LEXIS 34568 (9th Cir. 1999): The executors of the 
Estate of Diana, Princess of Wales, and trustees of her memorial fund 
sued sellers of Princess Diana memorabilia. In rejecting the 
defendant's motion to dismiss the FTDA claim, the court noted that a 
surname is not inherently distinctive. ``Thus, to state a claim under 
the Federal Trademark Dilution Act for service mark infringement, a 
plaintiff must allege that the personal name asserted as a mark has 
acquired secondary meaning such that the name is synonymous in the 
public mind with the service provided by the plaintiff.'' Id. at 1034. 
Later, the court reached the same conclusion and then granted the 
defendant's motion for summary judgment on the FTDA claim on the basis 
that secondary meaning was not established. See, 107 F. Supp. 2d 1212, 
1222 (C.D.Cal. 2000).
    Avery Dennison Corp. v. Sumpton, 189 F.3d 868 (9th Cir. 1999): The 
owner of the marks ``Avery'' and ``Dennison'' for office products 
brought action against an Internet e-mail provider and its president, 
for registering ``avery.net'' and ``dennison.net'' as Internet domain 
names and licensing them as e-mail addresses. In reversing a grant of 
summary judgment for the owner of the marks, the court rejected the 
``argument that the distinctiveness required for famousness under the 
Federal Trademark Dilution Act is inherent, not merely acquired 
distinctiveness. However, because famousness requires a showing greater 
than mere distinctiveness, the presumptive secondary meaning associated 
with ``Avery'' and ``Dennison'' fails to persuade us that the 
famousness prong is met in this case.'' Id. at 877. (citations omitted)
    Star Markets, Ltd. v. Texaco, Inc., 950 F. Supp. 1030 (D.Hawaii 
1996): In this case, the court granted the defendant summary judgment 
on the plaintiff's FTDA claim because, while the mark had acquired 
distinctiveness, it was not famous, even though a survey had showed 
that 75% of the respondents associated the STAR trademark with the 
plaintiff's grocery stores. The court stated: ``Acquired 
distinctiveness is merely a minimum threshold for establishing 
protectability of a trademark that is not suggestive, arbitrary or 
fanciful. Once established, the [FTDA] compels the court to consider 
the degree of that distinctiveness as one of many factors for 
determining whether the mark is famous.'' Id. at 1033.

Eleventh Circuit
    Carnival Corp. v. SeaEscape Casino Cruises, Inc. 74 F. Supp. 2d 
1261 (S.D.Fla. 1999): Plaintiff brought claims based upon its trademark 
FUN SHIP. The court clearly found that the mark was descriptive, but 
had acquired secondary meaning. The court did not reject the 
plaintiff's FTDA claim on this basis. Rather, the court found that 
while the mark had acquired distinctiveness, it had not acquired 
sufficient fame to support an FTDA claim.

C. Other Cases with Comments Relevant to the Issue
Supreme Court
    Moseley v. V Secret Catalogue, Inc., 123 S. Ct. 1115 (2003): 
Plaintiff is the owner of the mark VICTORIA'S SECRET. Plaintiff brought 
suit against petitioners who opened a store named VICTOR'S SECRET and 
then changed the name, after being contacted by Plaintiff, to VICTOR'S 
LITTLE SECRET. The narrow issue on certiorari was whether objective 
proof of actual injury to the economic value of a famous mark is 
required for relief under the FTDA. The Supreme Court did not reach the 
issue of distinctiveness, but, in a footnote, quoted Nabisco, Inc. v. 
PF Brands, Inc.: ``[i]t is quite clear that the statute intends 
distinctiveness, in addition to fame, as an essential element. The 
operative language defining the tort requires that`the [junior] 
person's . . . use . . . cause dilution of the distinctive quality of 
the [senior] mark.' 15 U.S.C. Sec. 1125(c)(1). There can be no dilution 
of a mark's distinctive quality unless the mark is distinctive.'' 
Moseley, 123 S. Ct. at 1120 n.5. Some have argued that this is an 
endorsement of the notion that inherent distinctiveness is required. 
Professor J. Thomas McCarthy, however, strongly disagrees with this 
position. See, 4 McCarthy on Trademarks and Unfair Competition 
Sec. 24:91 to 24:91.2.

Second Circuit
    Sporty's Farm L.L.C. v. Sportsman's Market, Inc., 202 F.3d 489 (2nd 
Cir. 2000): In deciding whether or not the mark SPORTY'S was 
distinctive for the purpose of the FTDA, the Second Circuit stated, 
``Distinctiveness refers to inherent qualities of a mark and is a 
completely different concept from fame. A mark may be distinctive 
before it has been used--when its fame is nonexistent. By the same 
token, even a famous mark may be so ordinary, or descriptive as to be 
notable for its lack of distinctiveness.'' Id. at 497 (emphasis added).
    Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208 (2nd Cir. 1999): The 
Second Circuit affirmed the lower court's order entering a preliminary 
injunction against Nabisco using a mark consisting of an orange, bit-
sized, cheddar cheese flavored, fish-shaped cracker because it would 
dilute Pepperidge Farm's mark for its goldfish-shaped cracker. The 
court noted that ``[t]he first of [the distinctiveness and famous] 
factors invites the court to consider`the degree of inherent or 
acquired distinctiveness of the mark.' '' Id. at 215. The court found 
the Pepperidge Farm's goldfish cracker exhibits a moderate degree of 
distinctiveness and qualified it for protection under the FTDA.
    BigStar Entertainment, Inc. v. Next Big Star, Inc. 105 F. Supp. 2d 
185 (S.D.N.Y. 2000): Plaintiff sold motion picture videos and provided 
information regarding films and stars on the Internet using the marks 
BIGSTAR and BIGSTAR.COM. Plaintiff brought a trademark infringement and 
dilution action, with related state law claims, against a company 
conducting talent searches on the Internet using the marks NEXT BIG 
STAR and NEXTBIGSTAR.COM. In rejecting plaintiff's FTDA claim, the 
court noted that plaintiff's marks were composed of descriptive terms 
and relatively weak. While the court did not say that inherent 
distinctiveness was required under FTDA, it did conclude the marks did 
not qualify for protection under the FTDA because they did not have the 
requisite ``distinctiveness.''

Sixth Circuit
    Ford Motor Co. v. Lloyd Design Corp., 184 F. Supp. 2d 665 (E.D. 
Mich. 2002): Ford brought suit against the manufacturer of floor mats 
for use with Ford's vehicles that use Ford's marks without its 
authorization. In upholding the magistrate's preliminary injunction 
recommendation, based in part on a claim under the FTDA, the district 
court followed the Nabisco case and found:

        that the marks F-150', F-250' and F-
        350' are fanciful and, thus, of high distinction. 
        The trademark Aston Martin' is also highly 
        distinctive because, even though it is not purely fanciful, the 
        name is unlikely to signify anything in commerce but the 
        automobiles and accessories bearing the name. Since 
        Ford', Jaguar', Lincoln', 
        Mercury', Mustang', Bronco', 
        Taurus', Windstar', 
        Excursion', Expedition', 
        Navigator', Moutaineer', and 
        Thunderbird' are not purely fanciful, but are names 
        that are unrelated in everyday life to automobiles, the court 
        finds them to enjoy a moderate degree of distinctiveness. 
        Therefore, Plaintiffs have established the second element of an 
        FTDA claim. Hence, the only remaining factor is the fifth: 
        whether Defendant's use may cause dilution of the distinctive 
        quality of the senior mark.

Id. at 679. The court did not address whether inherent distinctiveness 
was required.
    AutoZone, Inc. v. Tandy Corp. 174 F. Supp. 2d 718 (M.D. Tenn. 
2001): AutoZone, Inc., brought an action based on its mark AUTOZONE for 
use in association with automotive parts store services against the 
Tandy Corporation for its use of the mark POWERZONE in association with 
electronics. In ruling that AutoZone did not have a viable FTDA claim 
because the marks were not similar enough, the court noted:

        distinctiveness plays a dual role in the dilution analysis. 
        First, as noted above, it is a statutory element; under the 
        statute, a mark does not receive protection unless it is 
        distinctive. Second, . . . the degree of distinctiveness of the 
        senior mark will have a considerable bearing on whether the 
        junior use will have a diluting effect. The more 
        distinctiveness the mark possesses, the greater is the interest 
        to be protected from dilution. For the reasons stated in the 
        distinctiveness analysis above, the Court concludes that, for 
        the purposes of dilution analysis, the AUTOZONE mark exhibits a 
        moderate degree of distinctiveness, entitling it to a 
        commensurate level of protection.

Id. at 736. The court noted (1) that the plaintiff was entitled ``to a 
presumption that its registered trademark is inherently distinctive,'' 
(2) that ``analysis using the traditional spectrum approach would lead 
to the same conclusions,'' but also (3) that the mark had acquired 
secondary meaning.
    NBBJ East Limited Partnership v. NBBJ Training Academy, Inc., 201 
F. Supp. 2d 800 (S.D. Ohio 2001): An architectural firm brought action 
against a computer training school, alleging infringement and dilution 
of its mark NBBJ. In granting plaintiff an injunction against defendant 
using the mark NBBJ, the court noted that distinctiveness is a required 
element of dilution and quoted the following passage from the Sixth 
Circuit opinion in the Moseley case (259 F.3d at 469):

        Distinctiveness is a crucial trademark concept, which places 
        marks on a ladder reflecting their inherent strength or 
        weakness. The degree of distinctiveness of a mark governs in 
        part the breadth of protection it can command. At the low end 
        are generic words--words that name the species or object to 
        which the mark applies. These are totally without 
        distinctiveness and are ineligible for protection as marks 
        because to give them protection would be to deprive competitors 
        of the right to refer to their products by name. . . . Thus, no 
        one can claim the exclusive right to use the mark ``CAR'' for a 
        car. One rung up the ladder are ``descriptive'' marks--those 
        that describe the product or its attributes or claims. These 
        also have little distinctiveness and accordingly are ineligible 
        for protection unless they have acquired ``secondary 
        meaning''--this is, unless the consuming public has come to 
        associate the mark with the products or unless the consuming 
        public has come to associate the mark with the products or 
        services of its user. . . . The next higher rung belongs to 
        ``suggestive'' marks; these fall in an in-between category. . . 
        . They are given less protection than is reserved for more 
        distinctive marks--those that are ``arbitrary'' or 
        ``fanciful.''. . . A mark is arbitrary or fanciful if there is 
        no logical relationship whatsoever between the mark and the 
        product on which it is used. . . . The most distinctive are 
        marks that are entirely the product of the imagination and 
        evoke no association with the human experience that relate 
        intrinsically to the product. . . . The strongest protection of 
        the trademark laws is reserved for these most highly 
        distinctive marks.

NBBJ East Ltd. Partnership, 201 F. Supp. 2d at 806. The court found 
that NBBJ was arbitrary or fanciful.

Ninth Circuit
    Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894 (9th Cir. 2000): 
The Ninth Circuit affirmed the lower court's ruling that MCA Records' 
use of Mattel, Inc.'s mark BARBIE was a parody and nominative fair use. 
In affirming the lower court's ruling that there was no claim for 
dilution under the FTDA, the Ninth Circuit noted that the mark BARBIE 
clearly met the requirements of fame and distinctiveness. Id. at 903. 
The court also held that MCA Records' use of the mark was dilutive. Id. 
However, the court determined that MCA Records' use of the mark BARBIE 
fell within the scope of the noncommercial use exemption to the FTDA. 
See id. at 904-07.

Eleventh Circuit
    Corbitt Manufacturing Co. v. GSO America, Inc., 197 F. Supp. 2d 
1368 (S.D. Ga. 2002): Corbitt brought an action based on its mark ``NO 
FLOAT'' for use in association with mulch. Corbitt claimed that GSO's 
mark ``NON-FLOATING'' on their packaging of mulch infringed Corbitt's 
mark. The court denied the plaintiff's request for preliminary 
injunction. In addressing Corbitt's dilution claim, the court held that 
while ``some factors favor Corbitt, it has not shown the requisite 
level of fame. As mentioned above, NO FLOAT is at best a descriptive 
mark with secondary meaning. In fact, it is entitled to this 
presumption only because of its incontestable status. Even after 
assuming this status applies in the dilution context, there is little 
evidence of the`acquired distinctiveness of the mark.' '' Id. at 1378.

Legal Treatises
    In his treatise, 4 McCarthy on Trademarks and Unfair Competition 
Sec. 24:91 to 24:91.2, the esteemed trademark law scholar, Professor J. 
Thomas McCarthy, finds no inherent distinctiveness requirement in the 
FTDA. In fact, he does not see ``distinctiveness'' as a separate 
element from fame. He believes that the distinctiveness requirement in 
the statute only means that the mark must properly qualify as a mark, 
namely that it has inherent or acquired distinctiveness. Otherwise, the 
term would not be a mark at all.

D. Conclusion
    An analysis of the case law and statute indicates that marks that 
have acquired distinctiveness should be protected under the FTDA. Given 
the consensus by a majority of Circuits, which is supported by both the 
text and purpose of the statute, the FTDA should be amended to clarify 
this point.

                         IV. NICHE MARKET FAME

    The Federal Trademark Dilution Act of 1995 should not be amended at 
this time to state either that marks which are famous within limited 
geographic areas or commercial market segments are eligible for 
dilution protection under the Trademark Act to the same extent as marks 
that are famous on a nation-wide basis, or to state that such marks are 
ineligible for dilution protection under the Act.
    There is no clear consensus on the issue of niche fame.\2\ No steps 
should be taken at this time to address the issue. Rather, the issue 
should be reevaluated after it has been defined further through the 
case law. Given the controversial nature of the niche fame issue, as 
shown by the divergent case law results below, and given that the issue 
has not been explicitly addressed in the FTDA before, we believe the 
issue of niche fame will be difficult to address through legislative 
changes. It is this controversy that distinguishes the niche fame issue 
from the acquired distinctiveness position noted above.
---------------------------------------------------------------------------
    \2\ See, e.g., Kenemuth, Lori, ``The Niche Market Manual: A Guide 
To Understanding The Niche Market Theory'', AIPLA Quarterly Journal, 
Vol. 32 No. 1, pp. 123-140 (author advocates preserving and applying 
the niche market theory under the FTDA).
---------------------------------------------------------------------------
A. The Niche Fame Issue Is Unresolved In The Courts
    There is a split among the Circuit Courts of Appeals on the issue 
of whether ``niche market'' fame satisfies the statutory requirement 
that marks be famous to qualify for protection under the Federal 
Trademark Dilution Act (``FTDA''). See 15 U.S.C. Sec. 1125(c) 
(extending federal trademark dilution protection to ``owner(s) of a 
famous mark . . .''). The Third, Fifth, Seventh and Ninth Circuits hold 
that fame of a mark in a particular market segment may be sufficient to 
satisfy the FTDA's fame requirement when the junior user's mark is used 
in the same market segment. The First and Second Circuits reject the 
``niche market'' standard, while the other Circuits have not formally 
opined on the issue.
    The following survey of the leading Circuit Court of Appeals 
opinions begins with the Seventh Circuit's Syndicate Sales decision 
because its analysis was particularly thorough and because it is widely 
cited by the other Circuits in their opinions on the issue.
    Syndicate Sales, Inc. v. Hampshire Paper Corp., 192 F.3d 633 (7th 
Cir. 1999): This case centered on a trade dress infringement and 
dilution dispute between manufacturers of competing plastic baskets 
used for floral bouquets at funerals. See Syndicate Sales, 192 F.3d at 
635. Finding that plaintiff's trade dress was famous, if at all, only 
among wholesalers and retail florists, the trial court held that fame 
in such a niche market cannot be sufficient to establish fame for 
purposes of the FTDA. Id. at 640. The Seventh Circuit disagreed and 
remanded for consideration of whether Syndicate Sales' trade dress was 
sufficiently famous in the market of wholesale and retail florists to 
qualify for federal dilution protection. Id. at 641.
    A mark may be eligible for protection under the FTDA, the Seventh 
Circuit concluded, even when its fame is ``limited to those engaged on 
a regular basis in commercial activity involving [the mark's] 
product.'' Id. at 641 fn.7.\3\ Specifically, the FTDA's fame 
requirement may be satisfied when a senior mark is famous in a 
particular commercial market segment and defendant is using its 
allegedly diluting mark in the same market. Id. at 641.
---------------------------------------------------------------------------
    \3\ In contrast to the 9th Circuit (see Avery Dennison Corp. v. 
Sumpton, 189 F.3d 868, 877-878 (9th Cir. 1999)), the 7th Circuit holds 
that fame within a limited geographic area is not sufficient for the 
FTDA. The legislative history of the Act made clear, the 7th Circuit 
noted, that, ``in order to be`famous,' a mark must be used in a 
substantial segment of the United States.'' Syndicate Sales, 192 F.3d 
at 641, fn. 7. While this meant that marks famous in one local area 
were not entitled to federal dilution protection, fame within a limited 
commercial segment was sufficient when the market within which the 
commercial activity was occurring was national in scope. Id.
---------------------------------------------------------------------------
    The court noted that prior decisions in which the courts held 
niche-fame insufficient had generally addressed situations in which the 
disputed marks were used in separate markets,\4\ while cases 
recognizing niche-market fame concerned disputed marks used in the same 
or related markets. Id. at 640. The court reasoned that one of the 
FTDA's ``fame'' factors, i.e. 15 U.S.C. Sec. 1125(c)(1)(F) (hereafter 
``Factor F''), ``may be constricted to a particular market.'' \5\ Id. 
at 641. The ``narrowness of the market in which a plaintiff's mark has 
fame'' must be considered, presumably against a finding of fame, but is 
``less important'' when the defendant uses its mark in the same market. 
Id. The court also found support for the niche fame concept in the 
Restatement, which concluded that: ``A mark that is highly distinctive 
only to a select class or group of purchasers may be protected from 
diluting uses directed at that particular class or group. Id. at 640, 
citing Restatement (Third) of Unfair Competition, Sec. 25, cmt. e 
(1995).\6\
---------------------------------------------------------------------------
    \4\ See Syndicate Sales, 192 F.3d at 640, fn. 5, citing, inter 
alia, Michael Caruso & Co. v. Estefan Enters. Inc., 994 F.Supp 1454, 
1463; Golden Bear Int'l v. Bear U.S.A., Inc., 969 F.Supp. 742, 749 
(N.D.Ga. 1996); King of the Mountain Sports, Inc. v. Chrysler Corp., 
968 F.Supp. 568, 578 (D.Colo. 1999). Because the cases focus on 
situations in which the two components of the niche fame doctrine are 
not present--fame of the plaintiff's mark in a specific market segment 
and use by defendant of its mark in the same segment--these decisions 
should not be read to reject a niche fame standard per se or to favor a 
``national renown'' standard.
    \5\ The FTDA lists 8 non-exclusive factors that a court may 
consider to determine whether the mark is distinctive and famous.'' See 
Syndicate Sales, 192 F.3d at 639, citing 15 U.S.C. Sec. 1125(c)(1). 
Factor F embraces ``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.'' 15 U.S.C. 
Sec. 1125(c)(1)(F).
    \6\ The Court also relied on Professor McCarthy, citing 4 J. Thomas 
McCarthy, McCarthy on Trademarks and Unfair Competition (``McCarthy'') 
Sec. 24:112 at 24-204 to 24-205 (1999). However, Professor McCarthy no 
longer supports the concept of niche fame: ``In the author's view, the 
federal anti-dilution act does not require courts to recognize the 
phenomenon of niche fame. . . . [Indeed,] recognition of niche fame is 
an improper application of the federal act, is an unnecessary and 
superfluous legal theory and improperly displaces the traditional 
balance of competitive rights reflected in the likelihood of confusion 
test [for trademark infringement].'' 4 McCarthy Sec. 24:112.1 at 24-273 
(2003).
---------------------------------------------------------------------------
    Times Mirror Magazines, Inc. v. Las Vegas Sports News, L.L.C., 212 
F.3d 157 (3rd Cir. 2000), cert. denied, 531 U.S. 1071 (2001): In this 
case, the Third Circuit affirmed a preliminary injunction on trademark 
dilution grounds. See Times Mirror, 212 F.3d at 160, 170. Plaintiff's 
publication, The Sporting News, provided information on sports such as 
baseball, basketball, football and hockey and had a weekly circulation 
of about 540,000 in the United States and Canada. The Sporting News was 
sold at newsstands throughout the country and was advertised on 
television, on radio, and in direct mail. Id. at 161-162. Defendant's 
Las Vegas Sporting News focused on ``sports wagering`for the sports 
gaming enthusiasts . . .' '' Id. at 161 (internal record citation 
omitted). With a circulation of 42,000, the Las Vegas Sporting News was 
also sold at newsstands across the country, but most copies were given 
away free in gambling casinos. Id. Citing Syndicate Sales and the 
Restatement, the Third Circuit endorsed the niche-fame standard: ``We 
are persuaded that a mark not famous to the general public is 
nevertheless entitled to protection from dilution where both the 
plaintiff and defendant are operating in the same or related markets, 
so long as the plaintiff's mark possesses a high degree of fame in its 
niche market.'' Id. at 164. The court held that the two marks at issued 
``shared a common market,'' i.e. the ``sports periodical market.'' 
Because ``the mark`The Sporting News' was famous in its niche,'' it was 
``entitled to protection under the FTDA against [Las Vegas Sporting 
News]'s used of a similar mark in the same market.'' Id. at 165.
    In a sharply worded dissent, Judge Barry disagreed, although from 
her opinion it is not clear whether she rejects the niche fame doctrine 
entirely or as applied in this case.\7\ The problem with the niche fame 
doctrine, Judge Barry argued, is that it threatens to devour 
infringement law by providing a powerful trademark remedy in situations 
where infringement law ought to apply, but without plaintiffs having to 
prove likelihood of confusion. See id. at 174. In the case at bar, 
Judge Barry stated, plaintiff ought to have shown that its mark was 
``truly famous among members of the general public.'' Id. at 176. Even 
as to Factor F, plaintiff failed to present evidence that its mark was 
``recognized by a substantial portion of [Las Vegas Sporting News]'s 
potential consumers.'' Id. at 175.
---------------------------------------------------------------------------
    \7\ On the one hand, Judge Barry noted that ``the legislative 
history does not mention much less embrace a so-called`niche market' 
theory of fame.'' Times Mirror, 212 F.3d at 173. Moreover, ``although 
Factor (F) focuses the analysis on the channels of trade in which the 
parties operate, it does not dictate the conclusion that fame solely 
within those channels of trade is enough for protection.'' Id. at 175. 
That analysis supports the conclusion that only widely-renowned marks 
deserve federal dilution protection. Or as Judge Barry states towards 
the end of her dissent, ``I do not believe . . . [that] a mark not 
immediately recognizable by the general public can . . . meet the fame 
requirement of the FTDA. Id. at 179. But Judge Barry also worried that 
``the niche market theory risks lowering the bar for trademark 
protection unless it is applied prudently to cases which clearly call 
for such an analysis, and this is not one.'' Id. at 173; emphasis 
added. Moreover, Judge Barry urges a court inclined to rule that a mark 
``famous only in its niche market . . . is entitled to protection under 
the FTDA, the evidence of fame should be rigorously examined.'' Id. at 
174.
---------------------------------------------------------------------------
    Advantage Rent-A-Car, Inc. v. Enterprise Rent-A-Car, Co., 238 F.3d 
378 (5th Circuit 2001): At issue in this case were similar slogans used 
by two rental car companies--Advantage's ``We'll Even Pick You Up'' and 
Enterprise's ``We'll Pick You Up'' and ``Pick Enterprise. We'll Pick 
You Up.'' See Advantage, 238 F.3d at 379. In denying Enterprise relief 
on its federal dilution claim, the district found that its mark was 
sufficiently famous. Id. at 379-380. The Fifth Circuit affirmed this 
finding, but cautioned that ``[t]o the extent that the district court's 
opinion can be read to suggest that Enterprise needed to prove fame 
beyond its market, we disagree.'' Id. at 380. Instead, the Court held, 
the correct standard was that adopted by the Seventh Circuit in 
Syndicate Sales and therefore what Enterprise needed, but failed, to 
prove was that its mark was famous ``within the car rental industry, 
not in a broader market.'' Id.
    Thane Int'l, Inc. v. Trek Bicycle Corp., 305 F.3d 894 (9th Cir. 
2002): In this action seeking declaratory relief, Trek had long used 
its trademark ``TREK'' on bicycles and related products, while Thane 
manufactured a stationary exercise machine under the ``OrbiTrek'' mark. 
See Thane, 305 F.3d at 898. The Ninth Circuit reversed summary judgment 
entered in Thane's favor on Trek's infringement claim, but affirmed on 
Trek's dilution claim. Id. at 913.
    Despite clear misgivings about the doctrine,\8\ the Thane court 
reaffirmed its prior endorsement of the niche fame standard that 
``marks famous in only a limited geographic area or a specialized 
market segment can be`famous' for the purposes of the federal anti-
dilution statute.'' Id. at 908, citing Avery Dennison Corp. v. Sumpton, 
189 F.3d 868, 877 (9th Cir. 1999). The court stressed that the FTDA 
``protects a mark only when a mark is famous within a niche market and 
the alleged diluter uses the mark within that niche.'' Id., emphasis 
original; see also Avery Dennison, 189 F.3d at 877 (``[F]ame in a 
localized trading area may meet the [statutory fame requirement, as 
may] ``specialized market segments . . . [when] the diluting uses are 
directed narrowly at the same market segment''; internal citations 
omitted).
---------------------------------------------------------------------------
    \8\ See Thane, 305 F.3d at 908 (noting the Avery Dennison Court's 
``repeated admonition that only prominent and renowned marks deserve 
[federal dilution protection]. . .''
---------------------------------------------------------------------------
    A finding of fame for dilution purposes was unwarranted in the case 
at bar, the court explained, because, while TREK was a famous mark in 
the ``non-stationary bicycle'' market segment, its fame did not extend 
to the market segment that Thane functioned in--``stationary exercise 
machines.'' Id. at 910. The analysis may turn on the appropriate level 
of generality; to establish niche fame, the relevant market must be 
defined very precisely: ``To maintain coherence, the niche fame concept 
must focus on highly specialized market segments with an identifiable 
customer base.'' Id. at 909. Within such well-defined market segments, 
``participants are likely to make associations between marks that the 
general public will not make.'' Id. Conversely, as the level of 
generality expands--for example, conceiving the market in the case at 
bar as ``sporting goods''--it becomes less likely that consumers in the 
various submarkets will form associations between disputed marks: 
``There is no reason why participants in this broad market will have 
any particular knowledge about products in submarkets in which they do 
not participate.'' See id.
    Further, in assessing niche fame, the extent and duration of use 
within the particular market segment is crucial: ``[A] mark that is not 
widely associated with a particular product within a particular niche 
market is almost surely not famous in that market.'' Id. Federal 
dilution law seeks to prevent junior users from appropriating the 
goodwill that a famous mark has developed over time. ``Where there has 
been no successful, long-term development of goodwill with respect to 
particular markets, asserting fame within that specialized market is 
simply inconsistent with the purpose of the antidilution protection.'' 
Id. Accordingly, Trek's brief sale of stationary exercise bicycles or 
plans to re-enter that market did not support its dilution claim. Id.
    I.P. Lund Trading ApS v. Kohler Co., 163 F.3d 27 (1st Cir. 1998): 
In a trade dress dispute involving the design and appearance of water 
faucets, the 1st Circuit affirmed the denial of a preliminary 
injunction on I.P. Lund's infringement claim and vacated the grant of 
the injunction on its federal trademark dilution claim. See, I.P. Lund, 
163 F.3d at 32. In creating an ``exceptional anti-dilution remedy for 
truly famous marks,'' the court explained, the FTDA imposed a 
``heightened'' and ``rigorous standard for fame.'' Id. at 33, 47. 
Accordingly, ``national renown is an important factor in determining 
whether a mark qualifies as famous under the FTDA.'' Id. at 47. By this 
standard, the fact that I.P. Lund's faucet may have been ``renowned . . 
. in the world of interior design and high-end bathroom fixtures'' did 
not establish that its design was ``sufficiently famous to qualify for 
the FTDA's protection.'' Id. at 60.
    TCPIP Holding Company, Inc. v. Haar Communications, Inc., 244 F.3d 
88 (2d Cir. 2001): In this case, the operator of a chain of children's 
clothing stores under the registered mark ``The Children's Place'' 
obtained a preliminary injunction barring defendant from using a number 
of internet domain names it owned that incorporated variations on 
plaintiff's mark. TCPIP, 244 F.3d at 90. While affirming the injunction 
as to some of defendant's domain names on infringement grounds, the 
Second Circuit vacated the injunction to the extent it was based on the 
FTDA. See id.
    The court emphasized the greatly ``expanded rights'' conferred by 
federal dilution law over those enjoyed under traditional infringement 
law and its likelihood of confusion analysis. See id. at 94-95. The 
FTDA gave a trademark owner ``a far greater scope of exclusivity'' than 
classic trademark infringement law and, because of that expansion, 
restricted the ``class of entities for whose benefit the law was 
created.'' See id. at 95. In view of the broad sweep of anti-dilution 
protect and the narrow range of intended beneficiaries, the court 
reasoned that Congress likely did not intend ``to confer on marks that 
have enjoyed only brief fame in a small part of the country, or among a 
small segment of the population, the power to enjoin all other users 
throughout all realms of commerce.'' Id. at 99. Accordingly, the FTDA's 
protections did not extend to marks ``that are famous in only a small 
area or segment of the nation,'' but rather only to marks that carry 
``a substantial degree of fame.'' Id. Plaintiff's evidence did not 
amount to such a showing and, accordingly, the preliminary injunction 
had to be vacated to the extent it was premised on the FTDA. See id. at 
100.
B. Selected District Court Decisions from Other Circuits Show 
        Divergence In The Approach To Niche Fame

Fourth Circuit
    Hartog & Co. AS v. SWIX.com, 136 F.Supp.2d 531, 534(E.D.Va. 2001) 
\9\--In this case, a manufacturer of a line of ski waxes, marketed 
under the trademark ``SWIX,'' sued an Internet services company that 
operated under the trade name SWiX Internet Dienste. See Hartog, 136 
F.Supp.2d at 534. Adopting the niche-fame doctrine, the court found no 
dilution on the ground that the two companies operated in different 
market segments. Id. at 538, citing Syndicate Sales, Inc. v. Hampshire 
Paper Corp., 192 F.3d 633, 640 (7th Cir. 1999). Because of the distinct 
market segments, ``the popularity of plaintiff's`SWIX' mark among 
American skiers is not enough to render it ``famous'' under the Lanham 
Act.'' Id.
---------------------------------------------------------------------------
    \9\ Disagreed with on other grounds, Harrods Ltd. v. Sixty Internet 
Domain Names, 302 F.3d 214, 228-232 (4th Cir. 2002).
---------------------------------------------------------------------------
Eighth Circuit
    Ott v. Target Corp., 153 F.Supp.2d 1055 (D.Minn. 2001)--In this 
action, a designer and manufacturer of collector dolls sued a store 
chain and other defendants over a line of dolls that she claimed 
infringed and diluted her products' trademarks and trade dress. See 
Ott, 153 F.Supp.2d at 1058-1062. Rejecting the ``niche fame'' doctrine, 
the court ruled that plaintiff's trademark dilution claim failed as a 
matter of law. Id. at 1075.
    Sharing Judge Barry's concern that trademark dilution based on 
niche fame risked subsuming classic infringement law, the court 
concluded that ``the niche-market theory is inconsistent with the 
purposes of trademark dilution law.'' Id. at 1075 (citing Times Mirror 
Magazines, Inc. v. Las Vegas Sports News, L.L.C., 212 F.3d 157, 174 (3d 
Cir. 2000)). The court emphasized that dilution law was designed to 
protect marks on non-competing goods and services. Id. at 1076 (citing 
Viacom Inc. v. Ingram Enterprises, Inc., 141 F.3d 886, 888 (8th Cir. 
1998)). The court explained: ``Because this case involves directly 
competing products, application of the niche-market theory would result 
in an over-extension of the protection afforded by the FDTA and would 
render trademark infringement laws duplicative.'' Id.

Eleventh Circuit
    Carnival Corp. v. SeaEscape Casino Cruises, Inc., 74 F.Supp.2d 1261 
(S.D.Fla. 1999)--In a case involving two cruise lines, the court held 
that plaintiff's mark was insufficiently famous to warrant federal 
dilution protection. See Carnival, 74 F.Supp. 2d at 1261. In applying 
the niche-fame doctrine, the court noted that, while the Eleventh 
Circuit had yet to explicitly address the issue, it had affirmed a 
previous lower court decision that had applied the doctrine. Id. at 
1271 (citing Michael Caruso & Co., Inc. v. Estefan Enterprises, Inc., 
994 F.Supp. 1454, 1463 (S.D.Fla. 1998), aff'd, 166 F.3d 353 (1998)). 
The court found that the two companies operated in related, but 
different markets namely Carnival offered several day ``vacation'' 
cruises, ``while SeaEscape's product is a day or evening of 
entertainment at sea.'' Id. at 1270-1271. Also finding Carnival's 
survey evidence weak, the Court held that plaintiff's mark was not 
``famous'' for purposes of a federal dilution claim. See id. at 1721.

C. Conclusion
    Although the courts are split on the issue of niche fame which 
usually suggests the need for a legislative change, the time is not 
ripe to consider a such a change. There is no consensus in the 
trademark community, in contrast to the case of protecting marks that 
have acquired distinctiveness, as to the resolution of this issue. 
There is too much disagreement over what the specific changes should 
be, if any, and thus no change is warranted at this time. As the courts 
continue to address the issue, a consensus may develop on the issue 
that does not now exist.

    Mr. Smith. Mr. Johnson.

 STATEMENT OF MARVIN J. JOHNSON, LEGISLATIVE COUNSEL, AMERICAN 
                     CIVIL LIBERTIES UNION

    Mr. Johnson. Thank you, Mr. Chairman. Chairman Smith and 
Ranking Member Berman, I am pleased to appear before you today 
on behalf of the American Civil Liberties Union and its more 
than 400,000 members across the country to discuss the 
committee print to amend the Federal Trademark Dilution Act, or 
FTDA.
    At the outset, let me say that trademarks provide an 
important tool for preventing confusion or deceptive marketing. 
To the extent that legislation furthers this goal, it is 
helpful and it is generally not destructive of the First 
Amendment values. After all, the First Amendment does not 
normally protect deceptive or misleading speech, particularly 
in a commercial context.
    However, there is a dynamic tension between the First 
Amendment and trademark law. On the one hand, you have 
trademark holders who want to be able to control what people 
say using their particular trademark. On the other hand, you 
have people who want to exercise their rights of free speech 
which is guaranteed by the First Amendment to the Constitution 
of the United States, and sometimes that free speech is going 
to be abrasive and it may not be terribly complimentary to the 
particular trademark holder.
    Now, the First Amendment protects not only the right to 
speak but the manner of speaking, as well, and so in using the 
trademark, they are using the trademark, if they are using it 
in a free speech context, they are using it in a perfectly 
permissible manner. But increasing the rights of trademark 
holders necessarily dilutes the rights of the people who want 
to speak because, essentially, you are giving a monopoly to the 
trademark holders of the use of that mark.
    For example, if Kodak is trademarked, then Kodak has the 
right to exclusive use of that mark. Minolta cannot market 
cameras under the Kodak name. Now, to the extent that trademark 
law prevents this confusion over who made the product, it is 
helpful. However, this concept of whether it is likely to be 
confused has also been an important check on the power of 
trademark law to infringe upon the rights of free speech. While 
a camera marketed by Minolta under the Kodak name might be 
confusing to consumers, a parody or criticism of Kodak is 
unlikely to be confusing about the origin of the product. Thus, 
consumers are protected and free speech is preserved.
    The Federal Trademark Dilution Act, however, makes the 
concept of confusion irrelevant, tilting the balance of power 
in favor of the trademark owners. Now, currently, there was 
some balance in the sense that the Supreme Court had held that 
there was supposed to be actual dilution. That, of course, 
raised the standard. It did make it a little more difficult in 
order to prove, and therefore, there was more protection for 
free speech.
    However, when you go to likelihood of dilution, that 
creates some problems. This particular provision in broadening 
to likelihood of dilution, basically, it allows speech critical 
of a company to be enjoined even if it is true, because it is 
likely to result in dilution. Now, this provision is 
particularly insidious because, unlike defamation law, under 
the FTDA, a preliminary injunction may be granted silencing the 
speaker until after a trial. Therefore, on speculation that a 
trademark may be diluted, a speaker may be muzzled.
    Now, as noted in my testimony, the likelihood of dilution 
standard has been used, particularly in the Second Circuit, to 
try to stop free speech that is critical to the trademark 
holder. When you couple that with dilution by tarnishment, it 
becomes particularly problematic. This proposed bill would, for 
the first time, give statutory recognition to the dilution by 
tarnishment. When you couple that with likelihood of dilution, 
you now end up with causes of action for the likelihood of 
tarnishment.
    Now, since tarnishment normally refers to comments that 
portray the trademark in an unwholesome or unsavory context 
likely to evoke unflattering thoughts about the owner's 
product, we now have a direct conflict between trademark and 
free speech. To the extent that any parody or criticism evokes 
unflattering thoughts about the owner's product, it has 
resulted in tarnishment and can, therefore, be enjoined.
    Now, on my written testimony, I have presented some 
examples, and I have some color examples here of the Joe Chemo 
ad that appeared in Ad Busters, and it is clearly a parody of 
the Joe Camel ad, or the trademark of Joe Camel for Camel 
cigarettes And so basically what you have here is a parody of 
the Joe Camel trademark, which is essentially talking about the 
dangers of smoking, and you have Joe Chemo here who is 
undergoing chemotherapy and has lost all of his hair and 
sitting here in a hospital bed, but it is clearly a parody that 
is being used to poke fun at this particular trademark.
    Now, do they intend an association with that trademark? 
Well, obviously. That is what you intend with a parody. So they 
have intended that association. Is it going to cause some sort 
of unflattering association with the trademark? That is 
certainly what they hope when they are trying to discourage 
smokers. So the idea here is that if you allow this tarnishment 
to be coupled with likelihood of dilution, it is very likely 
that the Joe Chemo ads and other ads like them could be hurt 
and would be stopped simply because it may likely result in 
tarnishment of the trademark.
    Now, we are not saying that Congress was unmindful of this 
tension between trademark and free speech. Obviously, there are 
some exemptions. Those exemptions have not been as protective 
of free speech as Congress had hoped. So because of that, we 
have grave concerns about the proposed bill as written, but we 
would be happy to work with the Committee to see if we can come 
to a resolution that would be more protective of free speech 
and still accomplish the goals.
    Mr. Smith. Thank you, Mr. Johnson.
    [The prepared statement of Mr. Johnson follows:]

                Prepared Statement of Marvin J. Johnson
    Chairman Smith, Ranking Member Berman and Members of the 

Subcommittee:
    I am pleased to appear before you today on behalf of the American 
Civil Liberties Union and its more than 400,000 members, dedicated to 
preserving the principles of the Constitution and the Bill of Rights, 
to explain the ACLU's views on the Committee Print to Amend the Federal 
Trademark Dilution Act. This bill proposes to greatly expand the 
existing Act, making dilution actions easier for trademark holders 
while simultaneously diluting protections for free speech. We urge you 
to continue to require actual dilution in any cause of action, and to 
make some other amendments that will be more protective of free speech.
    Trademark law provides an important tool for preventing confusion 
or deceptive marketing, but trademark laws should not be used as a 
pretext to stifle criticism, parody or legitimate competition when 
there is no reasonable likelihood of confusion and no actual dilution 
caused by use of the trademark.
    This proposed bill is a significant expansion of the current 
dilution statute, and allows injunctions of speech in more instances. 
Dilution causes of action are problematic under the First Amendment 
because they allow commercial entities to secure injunctions 
prohibiting speech that is truthful and neither misleading or 
confusing. The basis of the injunction is that someone else other than 
the trademark holder used a word that is identical or similar to a 
trademark, and that the use might lessen the consuming public's 
association of the term with the trademark. Congress initially drafted 
the Federal Trademark Dilution Act (``FTDA'') somewhat narrowly, 
requiring proof of actual dilution. This lessened the statute's impact 
on First Amendment activity. The proposed revision, however, adopts a 
``likelihood of dilution'' standard, significantly easing the burden of 
proving ``dilution,'' and increasing the danger to First Amendment 
activity.
    We will first provide some background on the tension between 
trademarks and free speech, and then discuss specific problems with the 
proposed bill.

                               BACKGROUND
    Trademark law developed primarily to protect the interests of 
consumers to receive reliable information about goods and services. To 
accomplish this objective, the suppliers of these goods and services 
were granted limited rights to regulate the misleading use of their 
brands and associated symbols. The grant of these rights, however, has 
the potential to impinge upon the ability of the public to communicate 
and receive information. Purposeful limitations were therefore placed 
on the rights of the trademark holder to avoid this problem. One of 
those limitations was the doctrine of ``confusion'': trademark rights 
were only enforceable where another's use is likely to cause 
confusion.\1\ This standard alleviates the tension between the 
interests of consumers and the broader free speech interest of the 
public in general.
---------------------------------------------------------------------------
    \1\ See 2 J. Thomas McCarthy, McCARTHY ON TRADEMARKS AND UNFAIR 
COMPETITION Sec. 2:32 (explaining that the limited, quasi-property 
right of trademark holders has extended from tort, rather than property 
law).
---------------------------------------------------------------------------
    Courts and commentators have long recognized that trademark 
liability implicates the First Amendment. ``Because the trademark law 
regulates the use of words, pictures, and other symbols, it can 
conflict with values protected by the First Amendment. The grant to one 
person of the exclusive right to use a set of words or symbols in trade 
can collide with the free speech of others.'' \2\ The Restatement 
(Third) of Unfair Competition noted in a comment that the ``use of 
another's trademark, not as a means of identifying the user's own goods 
or services, but as in incident of speech directed at the trademark 
owner, . . . raises serious free speech concerns.'' \3\
---------------------------------------------------------------------------
    \2\ 1 Pat. L. Fundamentals Sec. 4.04 (2d ed.). Some commentators 
have opined that anti-dilution statutes are inherently antithetical to 
the First Amendment. See, e.g., Marla J. Kaplan, ``Antidilution 
Statutes and the First Amendment,'' 21 Southwestern University Law 
Review 1139 (1992) (arguing that antidilution statutes violate the 
First Amendment because they prohibit commercial speech that does not 
mislead or deceive and because there is no substantial government 
interest to support them; also arguing that antidilution laws are not 
designed to protect the public, as was trademark law's historical 
purpose.)
    \3\ Restatement (Third) of Unfair Competition Sec. 25 cmt. i 
(1995). See, also, ACLU v. Miller, 977 F.Supp. 1228 (N.D. Ga. 1997) in 
which the court granted a preliminary injunction against a statute 
forbidding ``any person . . . knowingly to transmit any data through a 
computer network  . . . if such data uses any . . . trade name, 
registered trademark, logo, legal or official seal, or copyrighted 
symbol . . . which would falsely state or imply that such person . . . 
has permission or is legally authorized to use [it] for such purpose 
when such permission or authorization has not been obtained.'' The 
court found this provision overbroad, in that it prohibited speech 
protected by the First Amendment.
---------------------------------------------------------------------------
    Noting the conflict between trademark law and free speech, the 
Fourth Circuit Court of Appeals stated in CPC International, Inc. v. 
Skippy Incorporated: \4\
---------------------------------------------------------------------------
    \4\ CPC International, Inc. v. Skippy Incorporated, 214 F.3d 456 
(4th Cir. 2000).

        It is important that trademarks not be ``transformed from 
        rights against unfair competition to rights to control 
        language.'' . . . Such a transformation would diminish our 
        ability to discuss the products or criticize the conduct of 
        companies that may be of widespread public concern and 
        importance. . . . ``Much useful social and commercial discourse 
        would be all but impossible if speakers were under threat of an 
        infringement lawsuit every time they made reference to a 
        person, company or product by using its trademark.'' \5\
---------------------------------------------------------------------------
    \5\ Id. at 462.

Despite free speech concerns, Congress passed the FTDA in 1995 to 
provide protection from trademark dilution. ``Dilution'' is defined as 
the ``lessening of the capacity of a famous mark to identify and 
distinguish goods orservices, 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.'' \6\
---------------------------------------------------------------------------
    \6\ 15 U.S.C. 1127.
---------------------------------------------------------------------------
    The FTDA provides, in part, that the owner of a famous mark is 
entitled to relief against another's commercial use in commerce of a 
mark, ``if such use begins after the mark has become famous and causes 
dilution of the distinctive quality of the mark.'' [Emphasis added.] 
Because of the ``causes dilution'' language, the Fourth and Fifth 
Circuits required there be actual proof of dilution.\7\ The First, 
Second, Sixth, and Seventh Circuits, however, adopted a ``likelihood of 
dilution'' standard, as they believed actual dilution would be 
impossible to prove.\8\ The Supreme Court settled the controversy in 
Moseley v. V Secret Catalogue, Inc., 537 U.S. 418 (2003), when it held 
that the statute required actual proof of dilution.\9\ The proposed 
bill seeks to overturn Moseley by amending the statute to only require 
``likelihood of dilution.'' While this makes it much easier for 
trademark holders to bring dilution actions, it also significantly 
decreases protection for activities protected under the First 
Amendment.
---------------------------------------------------------------------------
    \7\ Ringling Brother-Barnum & Bailey Combines Shows, Inc. v. Utah 
Division of Travel Development, 170 F.3d 449 (4th Cir. 1999); 
Westchester Media v. PRL USA Holdings, Inc., 214 F.3d 658 (5th Cir. 
2000).
    \8\ I.P. Lund Trading ApS, Inc. v. Kohler Co., 163 F.3d 27 (1st 
Cir. 1998); Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208 (2d Cir. 
1999); V Secret Catalogue Inc. v. Moseley, 259 F.3d 464 (6th Cir. 
2001); Eli Lilly & Co. v. Natural Answers Inc., 233 F.3d 456 (7th Cir. 
2000).
    \9\ The Supreme Court did not reach any issue of constitutionality 
in the case. It was decided purely on the basis of statutory 
construction.
---------------------------------------------------------------------------
    The government interest in protection of trademarks arises when the 
use of a trademark diminishes its distinctiveness. Trademarks are 
valuable as identifiers of the source of goods. To the degree this 
effect is hindered, the public is harmed. The use of a mark to identify 
the source of a product is central to dilution actions. Consider the 
example used in the original article in 1927 to justify dilution 
statutes, and the example used during debates on the FTDA in 1995: the 
use of the name Kodak on pianos. Where the use of a trademark leads to 
confusion as to the source of the product, the government may have a 
``substantial interest'' in preventing dilution. After all, slapping 
the brand name ``Kodak'' on a piano has little expressive purpose and 
could lead to consumer confusion.
    Where, however, a trademark is used for parody, commentary, or 
criticism of a product or service, confusion is far less likely, and 
the government's interest in protecting a trademark over free speech is 
minimal. As noted above, empowering trademark owners to quash criticism 
merely because it involves the use of a trademark transforms the 
trademark owner into a monitor of the spoken and written English 
language.

   BECAUSE THE BILL WOULD REQUIRE ONLY A ``LIKELIHOOD OF DILUTION,'' 
 INSTEAD OF ACTUAL DILUTION, TRADEMARK HOLDERS WILL BE ABLE TO STIFLE 
              SPEECH THAT IS CRITICAL OF THEIR TRADEMARK.

    To allow actions for ``likelihood of dilution'' would broaden 
dilution to permit injunctive relief against speech that is not 
confusing or deceptive and has not yet caused harm. Since dilution can 
occur either by blurring or tarnishment,\10\ this broadening would 
include the ``likelihood of tarnishment.'' Thus, under the ``likelihood 
of dilution'' standard, speech critical of a company could be enjoined, 
even if true, because it is likely to result in tarnishment.
---------------------------------------------------------------------------
    \10\ ``Blurring'' involves the gradual whittling away or dispersion 
of the identity and hold upon the public mind of the mark or name by 
its use upon noncompeting goods. ``Tarnishment'' results when one party 
uses another's mark in a manner that tarnishes or appropriates the 
goodwill and reputation assosciated with the mark.
---------------------------------------------------------------------------
    The idea that trademark owners would use the FTDA to stifle 
criticism is far from a fanciful notion. It occurred in the Second 
Circuit, which had interpreted the FTDA to require only a ``likelihood 
of dilution.''
    In WWF v. Bozell,\11\ the World Wrestling Federation (WWF) sued 
individuals for defamation and dilution of the WWF mark. The defendants 
had embarked on a public relations campaign claiming that the WWF was 
in part responsible for the deaths of several children killed by 
teenage wrestling fans who claimed to be mimicking WWF wrestling moves. 
This speech clearly should have been protected speech under the First 
Amendment. The court, however, held that the public relations campaign 
qualified as ``commercial use in commerce'' as required by section 
43(c) of the Lanham Act because defendants attempted to raise money for 
their cause (``commercial use'') and posted their statements on the 
Internet (``in commerce''). Thus, Bozell's actions did not fit within 
the exemption for noncommercial use of a mark, and therefore received 
no protection under the First Amendment. The court rejected defendants' 
motion to dismiss. The court also rejected defendants' claims that the 
First Amendment required dismissal.
---------------------------------------------------------------------------
    \11\ WWF v. Bozell, 142 F.Supp.2d 514 (SDNY 2001).
---------------------------------------------------------------------------
    It is important to note that, unlike defamation claims, a dilution 
claim permits the court to order preliminary injunctive relief. The 
anti-violence/anti-WWF campaign could be enjoined pending trial in 
order to protect WWF from the ``likelihood'' that the campaign would 
tarnish its mark.
    In another case from the Second Circuit, Scholastic Inc. v. 
Stouffer,\12\ the author and publisher of the hugely popular Harry 
Potter books sought a declaratory judgment that it had not infringed on 
Stouffer's copyrights or trademarks. Stouffer counterclaimed, alleging, 
among other things, dilution and defamation. The defamation claim was 
based on plaintiffs' alleged portrayal of Stouffer as a ``golddigger'' 
whose claims were ``absurd,'' ``ridiculous'' and ``meritless.'' \13\ 
The court dismissed the claim ``to the extent it asserts a claim for 
defamation, but declines to dismiss this claim to the extent it 
asserted a claim for dilution under federal or state law.'' \14\ 
Therefore, a dilution action was allowed to proceed even though the 
comments should have been protected as free speech.
---------------------------------------------------------------------------
    \12\ Scholastic Inc. v. Stouffer, 124 F.Supp.2d 836 (S.D.N.Y. 
2000).
    \13\ Id. at 849.
    \14\ Id. at 852.
---------------------------------------------------------------------------
    By requiring only a ``likelihood of dilution,'' trademark holders 
will now have a more potent weapon to stifle speech that is critical or 
a parody of their trademark. Furthermore, unlike defamation law, under 
the FTDA a preliminary injunction may be granted, silencing the speaker 
until after a trial. Thus, on the speculation that a trademark may be 
diluted a speaker may be muzzled. In essence, trademark holders now 
have a monopoly on certain words, expressions and images.
    We urge you to reject the ``likelihood of dilution'' standard and 
maintain the ``actual dilution'' language currently in the FTDA.

  BECAUSE THE BILL WOULD MAKE DILUTION BY TARNISHMENT ACTIONABLE, THE 
                     BILL WOULD STIFLE FREE SPEECH.

    Specifically recognizing ``tarnishment'' as a cause of action opens 
the door to silencing critics of a trademark,
    There are two commonly recognized forms of dilution: blurring and 
tarnishment.\15\ ``Blurring involves the gradual whittling away or 
dispersion of the identity and hold upon public mind of the mark or 
name by its use upon noncompeting goods.'' \16\ ``Tarnishment results 
when one party uses another's mark in a manner that tarnishes or 
appropriates the goodwill and reputation associated with the mark.'' 
\17\ The current FTDA applies to dilution by blurring, but does not 
make dilution by tarnishment actionable (although some courts have read 
it to include tarnishment). The proposed bill would explicitly make 
tarnishment actionable as well.
---------------------------------------------------------------------------
    \15\ Westchester Media v. PRL USA Holdings, Inc., 214 F.3d 658, fn. 
12 (5th Cir. 2000).
    \16\ Id.
    \17\ Id.
---------------------------------------------------------------------------
    ``Tarnishment generally arises when the plaintiff's trademark is 
linked to products of shoddy quality, or is portrayed in an unwholesome 
or unsavory context likely to evoke unflattering thoughts about the 
owner's product.'' \18\ Unfortunately, it also provides trademark 
holders with another cause of action to silence critics. Additionally, 
a broad application of tarnishment acts to chill commercial speech.\19\ 
For example, in Deere v. MTD, the court found dilution by tarnishment 
where a competitor showed Deere's trademark, a running deer, fleeing 
from the competitor's tractor.
---------------------------------------------------------------------------
    \18\ Deere & Company v. MTD Products, Inc., 41 F.3d 39, 43 (2d Cir. 
1994).
    \19\ The Supreme Court has recognized that commercial speech is 
entitled to First Amendment protection. See Va. State Bd. Of Pharmacy 
v. Va. Citizen's Consumer Council, Inc., 425 U.S. 748, 761 (1976).
---------------------------------------------------------------------------
    What the proposed bill fails to recognize is that trademarks have a 
huge impact on our shared culture. Trademarks have become essential to 
the communication about particular goods or services, often 
representing the most effective means by which to state one's 
position.\20\
---------------------------------------------------------------------------
    \20\ See Meyer v. Grant, 486 U.S. 414 (1988) (stating that the 
First Amendment not only protects the right to advocate a cause, but 
also the right to select the most effective means to do so).
---------------------------------------------------------------------------
    By coupling the ``likelihood of dilution'' standard along with 
tarnishment, trademark holders can now argue their trademark is 
``likely to be tarnished'' and possibly prevail, even though no 
tarnishment has actually occurred. Furthermore, the trademark holder 
can obtain an injunction against the speech long before a trial is even 
held.
    If tarnishment remains as a cause of action, the exemptions must 
make clear that fair use and free speech are fully protected, even if 
used in commercial speech. Furthermore, the definition of 
``tarnishment'' in Section 2(c)(2)(C) should be changed. Currently, it 
defines tarnishment as ``association between a designation of source 
and a famous mark, arising from their similarity, that harms the 
reputation of the famous mark.'' The definition is too vague and would 
sweep into it parody and criticism. After all, if the criticism is 
successful, won't it ``harm'' the mark? If the parody (in the case of 
the Joe Chemo ``subvertisement'' contained in the Appendix) is 
successful in reducing smoking, isn't it harming the mark? Tarnishment 
has traditionally been used where the mark is associated with illegal 
activity or sexual activity.\21\ ``Harm'' should be more specifically 
defined to make it clear what kind of harm is contemplated.
---------------------------------------------------------------------------
    \21\ Unless the material is found to be ``obscene,'' sexual 
material is protected under the First Amendment. We therefore do not 
recommend defining sexual activity that is not obscene as tarnishment.
---------------------------------------------------------------------------
  THE BILL INAPPROPRIATELY CONTINUES TO RELY ON A DISTINCTION BETWEEN 
      ``COMMERCIAL'' AND ``NONCOMMERCIAL'' TO DETERMINE THAT ONLY 
  ``NONCOMMERCIAL'' SPEECH IS PROTECTED. THIS STRIPS PROTECTION FROM 
     COMMERCIAL SPEECH, AS WELL AS SPEECH THAT HAS ONLY INCIDENTAL 
                         COMMERCIAL COMPONENTS.

    The fact that the communication carries a commercial component 
should not automatically deprive the communication of First Amendment 
protection. In many cases, the commercial component is what makes the 
communication viable. ``A social satire is no less effective or 
communicative if sold than if given away, and the costs of printing and 
distributing the message . . . can generally be recouped through sales 
of the item in question.'' \22\ Furthermore, as even commercial speech 
is protected under the First Amendment, it makes little sense to 
deprive it of protection under the FTDA simply because it is 
commercial.
---------------------------------------------------------------------------
    \22\ Michael A. Albert and Robert L. Bocchino, Jr., ``Trade Libel: 
Theory and Practice Under the Common Law, The Lanham Act, and the First 
Amendment,'' 89 Trademark Rep. 826, 883 (1999).
---------------------------------------------------------------------------
    It is not always easy to determine what is and is not 
``commercial'' speech. The United States Supreme Court has held that 
commercial speech is ``speech proposing a commercial transaction.'' 
\23\ Within those narrow confines, the definition may be sufficient. 
The question of what constitutes commercial speech however is far more 
nuanced, and bright lines are hard to find. For example, in Rubin v. 
Coors Brewing Co., 514 U.S. 476 (1995), the Court found that a 
statement of alcohol content on the label of a beer bottle constituted 
commercial speech. Likewise, the Court found commercial speech in 
statements on an attorney's letterhead and business cards identifying 
him as a Certified Public Accountant and Certified Financial 
Planner.\24\
---------------------------------------------------------------------------
    \23\ Central Hudson Gas & Elec. v. Public Serv. Comm'n, 447 U.S. 
557, 562 (1980), Bolger v. Youngs Drug Products Corp. 463 U.S. 60, 66 
(1983).
    \24\ Ibanez v. Florida Dept. of Business & Professional Regulation, 
Bd. Of Accountancy, 512 U.S. 136 (1994).
---------------------------------------------------------------------------
    In Bolger, the United States Supreme Court was faced with a 
question of whether a federal law prohibiting the mailing of 
unsolicited advertisement for contraceptives violated the federal 
Constitution's free speech provision as applied to certain mailings by 
a corporation that manufactured, sold, and distributed contraceptives. 
One category of the mailings in question consisted of informational 
pamphlets discussing the desirability and availability of prophylactics 
in general or the corporation's products in particular. The Court noted 
that these pamphlets did not merely propose commercial 
transactions.\25\ While the parties conceded the pamphlets were 
advertisements, the Court did not find that fact alone sufficient to 
make them commercial speech, because paid advertisements are sometimes 
used to convey political or other messages unconnected to a product or 
service or commercial transaction.\26\ The Court concluded that a 
combination of three factors, all present in this case, provided strong 
support for characterizing the pamphlets as commercial speech. The 
three factors examined by the court were: (1) advertising format; (2) 
product references; and (3) commercial motivation.
---------------------------------------------------------------------------
    \25\ Bolger, supra. at 62.
    \26\ Id.
---------------------------------------------------------------------------
    Part of the difficulty in applying Bolger is that the Court 
rejected the notion that any one of the factors was sufficient by 
itself, but also declined to hold all of these factors in combination, 
or any one of them individually, was necessary to support 
characterizing certain speech as commercial.\27\ It is no wonder the 
Supreme Court in later decisions acknowledged that ``ambiguities may 
exist at the margins of the category of commercial speech.'' \28\
---------------------------------------------------------------------------
    \27\ Id. at 67, fn. 14, and 66, fn. 13.
    \28\ Edenfield v. Fane, 507 U.S. 761, 765 (1993). See also, 
Cincinnati v. Discovery Network, Inc., 507 U.S. 410, 419 (1993) 
[recognizing ``the difficulty of drawing bright lines that will clearly 
cabin commercial speech in a distinct category''] and Zauderer v. 
Office of Disciplinary Counsel, 471 U.S. 626, 637 (1985) [stating that 
``the precise bounds of the category of . . . commercial speech'' are 
``subject to doubt perhaps.''].
---------------------------------------------------------------------------
    When given an opportunity to more clearly define commercial speech 
in Nike v. Kasky, the U.S. Supreme Court dismissed the case as having 
improvidently granted certiorari. Several members of the Court 
specifically noted the difficulty of the questions presented. As a 
result, lower courts are left to flounder, and often take an overly 
broad view of what constitutes commercial speech.
    Against this backdrop, and despite the fact that the Supreme Court 
has recognized that commercial speech enjoys First Amendment 
protection, the FTDA continues to rely upon a supposed bright-line 
distinction between fully protected and commercial speech, condemning 
any speech that is not ``pure'' (meaning it is not tainted with any 
commercial element).\29\
---------------------------------------------------------------------------
    \29\ Previous cases have demonstrated that protected speech tainted 
with magazine sales, Anheuser-Busch, Inc. v. Balducci Pub., 28 F.3d 
769, 775 (8th Cir. 1994), or T-shirt sales, Mutual of Omaha Insurance 
Co. v. Novak, 836 F.2d 397, 402 n.8 (8th Cir. 1987), are not deemed 
``non-commercial'' speech by the courts.
---------------------------------------------------------------------------
    Reliance on this supposed ``bright-line'' distinction ignores the 
fact that effective speech is rarely ``pure'' in that it lacks some 
commercial component. Activist groups routinely seek donations on a web 
site to support their work, sell T-shirts, stickers and books, and 
possibly even allow advertising on the web site. Yet, under the FTDA, 
critical websites and parodies that generate incidental revenue could 
still be found to be ``commercial'' and therefore subject to an 
injunction. The result is a chilling of the expressive use of 
trademarks in speech that mixes traditionally understood free speech 
with commercial elements.
    An example is Adbusters Media Foundation and its magazine, 
Adbusters. This publication features advertisement parodies, called 
``subvertisements,'' which use trademarks and corporate logos to 
generate awareness about social and political issues. One issue 
featured ``Joe Chemo,'' a parody of the ``Joe Camel'' character used by 
Camel cigarettes, to raise awareness of the health issues surrounding 
smoking.\30\ These ads represent a type of important civic speech that 
is traditionally protected under the First Amendment. It makes critical 
commentary on the trademark holder, furthering the traditional goals of 
trademark law by informing the consumer about the goods and services 
they purchase. While the speech is predominantly civic in nature, the 
commercial element of selling the magazine could well mean that the 
trademark holder under the FTDA could silence its critical speech.
---------------------------------------------------------------------------
    \30\ See Appendix for examples.
---------------------------------------------------------------------------
    Although Congress in adopting the FTDA, characterized the 
noncommercial use exception as adequate to accommodate First Amendment 
concerns, that assessment has proved to be unduly optimistic. Even 
courts that reach the right result often have to strain to protect free 
speech.
    When faced with a trademark dilution claim for the parody song 
``Barbie Girl,'' the Ninth Circuit Court of Appeals recognized that the 
song was entitled to protection under the First Amendment.\31\ It did 
not, however, fit neatly into the three exceptions noted in the FTDA: 
It was not comparative advertising, it was being sold for a commercial 
purpose, and it was not news reporting. In order to reach the correct 
result and deny the injunction, the court interpreted ``noncommercial 
use'' to refer to a use ``that consists entirely of noncommercial, or 
fully constitutionally protected, speech.'' \32\ ``If speech is not 
`purely commercial'--that is, if it does more than propose a commercial 
transaction--then it is entitled to full First Amendment protection.'' 
\33\ While such a result is correct, and comports with the legislative 
history of the FTDA indicating an intent to protect parodies, this is a 
somewhat strained definition, and certainly not followed by all courts. 
As noted above, in Bozell, a commercial purpose was found simply 
because Bozell sought donations over the Internet for his activities. 
Thus, the noncommercial use exception provides no consistent relief for 
those who engage in free speech activities.
---------------------------------------------------------------------------
    \31\ Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894 (9th Cir. 
2002).
    \32\ Id. at 905.
    \33\ Id. at 906.
---------------------------------------------------------------------------
    We recommend amending the exemptions to drop the distinction 
between ``commercial'' and ``noncommercial'' speech and provide an 
exemption for any speech protected by the First Amendment.

   INTENT OR BAD FAITH SHOULD BE AN ELEMENT OF THE BLURRING CAUSE OF 
                                ACTION.
                         SECTION 2(C)(2)(B)(V)

    One of the factors in determining dilution by ``blurring'' is 
``whether the user of the designation of source intended to create an 
association with the famous mark.'' In a parody, or criticism, the user 
of the mark obviously intends to create an association with the famous 
mark. The mere mental association is insufficient to support a blurring 
cause of action.\34\ The lack of an element of intent or bad faith 
would allow blurring to silence parody or criticism based merely on the 
intended association. We recommend that this factor encompass some form 
of bad faith or intent to harm (being specific about the type of harm 
contemplated).
---------------------------------------------------------------------------
    \34\ Moseley, supra. at 433.
---------------------------------------------------------------------------
HARM SHOULD ALSO BE INCORPORATED AS AN ELEMENT IN THE BLURRING CAUSE OF 
                                ACTION.

    Section 2(c)(2)(B)(vi) provides another factor in determining 
``blurring,'' and likewise relies upon association without a 
concomitant harm. [``Any actual association between the designation of 
source and the famous mark.''] Once again, a parody or criticism, if 
successful, would meet this criterion.
    We recommend that whatever harm this is intended to prevent be 
spelled out in more detail to avoid reliance on mere association as a 
factor in determining harm.

       SECTION 2(C)(4)(B) WOULD SWEEP IN PARODIES AND CRITICISM.

    Section 2(c)(4) provides for additional remedies (beyond an 
injunction) where the acts of the junior mark holder are intentional. 
Subsection B allows additional remedies in a tarnishment action where 
``the person against whom the injunction is sought willfully intended 
to trade on the reputation of the famous mark.'' Once again, this is 
exactly what a parody or criticism does--it trades on the reputation of 
the famous mark. Thus, speech that should be protected under the First 
Amendment could be used to justify even more damages than just an 
injunction.
 the fair use exemption should be expanded to encompass all fair uses.
    Both the current and the proposed FTDA allow an exception for 
``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.'' There is no rational basis for limiting 
fair use in this manner. Fair use is a much broader concept, and it 
should apply to trademark dilution actions in all situations, not just 
comparative advertising.

                               CONCLUSION

    By using trademark dilution as a claim, companies would have an 
additional potent weapon to silence their critics. Unlike defamation 
claims, the company need not demonstrate falsity or malice--only the 
``likelihood of tarnishment.'' To the extent any critic is successful, 
companies may be able to establish that their trademark is ``likely to 
be tarnished.'' Preliminary injunctive relief would silence the critics 
pending trial, even though the company has proven no actual harm to its 
trademark, and the court has made no final ruling that the critic's 
speech is unprotected.
    As the FTDA expands, it alters the dynamic tension between 
trademark holders and free speech in favor of trademark holders. While 
enriching trademark holders, it dilutes free speech without any 
concomitant benefit to society. Furthermore, it places the trademark 
holder in the position of holding an indefinite monopoly in expressive 
subject matter, and obstructs the public's ability to freely engage in 
a democratic dialogue.\35\
---------------------------------------------------------------------------
    \35\ See Cohen v. California, 403 U.S. 15, 26 (1971) (recognizing 
that the elimination of particular words poses a substantial risk of 
suppressing ideas in the process).
---------------------------------------------------------------------------

                               ATTACHMENT





    Mr. Smith. Mr. Stimson.

STATEMENT OF DAVID C. STIMSON, CHIEF TRADEMARK COUNSEL, EASTMAN 
                         KODAK COMPANY

    Mr. Stimson. Good morning, Mr. Chairman, Mr. Berman. Thank 
you for inviting me to testify.
    Kodak supports amending the Federal Trademark Dilution Act 
to address two issues raised by the Supreme Court's Mosely 
decision. First, the Court said that the owner of a famous mark 
must wait until there is some sort of demonstrable harm before 
a judge can issue an injunction in a dilution case. Second, the 
Court raised the possibility that tarnishment of a famous mark 
may not be actionable under the current statute.
    The FTDA was designed to protect famous trademarks, like 
Kodak. In the nearly 125 years since it was first coined, the 
Kodak trademark has gained the loyalty and trust of hundreds of 
millions of American consumers over six generations and has 
been used on billions of products and has generated hundreds of 
billions of dollars of revenue. As a result, the Kodak 
trademark today is one of the strongest and most famous 
trademarks in the United States and around the world. Surveys 
of brand value have consistently confirmed this.
    Just as Kodak has worked hard to establish the Kodak 
trademark, my colleagues and I work hard to strengthen and 
protect it. We understand its value and we are serious about 
protecting our ownership rights.
    The FTDA has been an important part of our strategy. Since 
1996, it has been there to help protect the Kodak brand from 
blurring and tarnishing uses before it is irreparably damaged. 
However, in the Moseley decision, the Supreme Court said that 
the text of the FTDA leads to the conclusion that a famous 
trademark owner must prove actual harm before a court issues an 
injunction in a dilution case. Mr. Chairman, an actual harm 
standard undercuts the effectiveness of the statute.
    A requirement that Kodak show actual harm would require us 
to spend months litigating at the potential costs of hundreds 
of thousands of dollars in legal and survey fees. But even more 
importantly, in the meantime, the dilution would continue and 
the value of our trademark would be constantly diminishing at a 
huge cost that could not be calculated. Once the injunction was 
finally issued, the damage to our trademark would already have 
been done.
    As an example, if Kodak were to be used as the name of a 
magazine containing photographs of child pornography, the 
damage to Kodak's image, reputation, and trademark would be 
obvious. If we were required to prove actual dilution, the 
sales of these magazines would continue and proliferate around 
the country. Even after we had shown actual dilution, we would 
never be able to retrieve all these magazines. Our Kodak 
trademark would be forever associated with child pornography in 
the minds of people who saw the magazines.
    Granting relief based on a showing of likelihood of 
dilution is essential for owners of famous trademarks to enable 
them to quickly stop this sort of serious damage to their 
reputation and good will. Therefore, Kodak believes that the 
best way to assure the effectiveness of a Federal dilution 
statute is to specifically incorporate a likelihood of dilution 
standard into the law.
    In light of the uncertainty raised by the Moseley decision, 
Kodak also supports adding to the FTDA an express cause of 
action for likelihood of dilution by tarnishment. To illustrate 
the need for protection against tarnishment, in the Internet 
world, there are unfortunately, Mr. Chairman, as you mentioned 
in your opening statement, many unscrupulous people who use our 
Kodak trademark as the domain names of websites that tarnish 
our Kodak trademark and identity. Some recent examples are 
kodak.net as the domain name for a website linked to a gambling 
casino; Kodaq with a ``q''.net for a professional male escort; 
and kodakcompany.com for nude and lingerie models. The FTDA 
should be amended to make it clear that uses like these, which 
use our trademark in connection with unsavory activities and 
tarnish its value, constitute dilution.
    We would also add that if the Congress were to provide a 
specific cause of action for likelihood of dilution by 
tarnishment, there should also be a cause of action for 
likelihood of dilution by blurring, which is the other 
recognized form of dilution.
    Thank you, Mr. Chairman, Mr. Berman, for this opportunity 
to testify. Revising the FTDA is a matter of great importance 
to Eastman Kodak Company. We therefore ask for your support in 
passing the appropriate legislation and your assistance to 
Kodak and other U.S. companies in protecting their valuable 
trademark assets. Thank you.
    Mr. Smith. Thank you, Mr. Stimson.
    [The prepared statement of Mr. Stimson follows:]

                 Prepared Statement of David C. Stimson

                            I. INTRODUCTION

    Good morning, Mr. Chairman. Thank you for inviting me to testify. 
My name is David Stimson. I am Chief Trademark Counsel for Eastman 
Kodak Company in Rochester, New York where I have been employed for the 
past 18 years.
    My volunteer activities in the trademark community include service 
on the U.S. Patent and Trademark Office Trademark Public Advisory 
Committee from 2000 to 2003 and with the International Trademark 
Association. I served as INTA president between May 1997 and May 1998. 
My comments here today concerning revision of the FTDA, however, are 
only on behalf of Kodak.
    Kodak supports amending the Federal Trademark Dilution Act (FTDA) 
\1\ to address issues raised by the Supreme Court's decision in Moseley 
v. V Secret Catalogue, Inc.\2\ This decision will hamper the ability of 
owners of famous trademarks like KODAK to protect their intellectual 
property from third party uses that either blur or tarnish. Blurring 
and tarnishment are the two forms that dilution can take. In Moseley, 
the court said that the owner of a famous mark must wait until there is 
some sort of demonstrable harm before a judge can issue an injunction 
in a dilution case. The court also raised the possibility that 
tarnishment of a famous mark may not be actionable under the current 
statute.
---------------------------------------------------------------------------
    \1\ Pub. L. No. 104-98, 109 Stat. 505 (1995).
    \2\ 123 S. Ct. 1115 (2003).
---------------------------------------------------------------------------
                        II. THE KODAK TRADEMARK

    The FTDA was designed to protect famous trademarks like KODAK. In 
the nearly 125 years since it was first coined, the KODAK trademark has 
been used on billions of products and has generated hundreds of 
billions of dollars of revenue. During that time Kodak has employed 
millions of American workers. Kodak has used the KODAK trademark on all 
its products and in all its advertising, gaining the loyalty and trust 
of hundreds of millions of American consumers over six generations.
    As a result, the KODAK trademark today is one of the strongest and 
most famous trademarks in the United States and around the world. It 
was even cited by Congress as a famous mark when the FTDA was adopted 
in the mid-1990s \3\ as well as by the United States Supreme Court in 
its Moseley decision.\4\ Surveys of brand value consistently place the 
KODAK trademark at the top of the list of the world's most valuable 
trademarks. The Forrester 2003 Technology Brand Scorecard placed KODAK 
number two among 58 major technology brands and number one in terms of 
usage and recognition. KODAK was the number one U.S. brand in the 2002 
WPP Brandz study that measured consumers' bonding with over 17,000 
brands.\5\ Independent news reporters have called KODAK ``one of the 
world's best known brands'' \6\ and have said that ``[f]ew American 
companies have the kind of brand loyalty and history that Kodak has. . 
. .'' \7\ So important is the KODAK trademark to our company that our 
CEO Dan Carp has listed ``brand strength'' as the first among our five 
``core competencies.''
---------------------------------------------------------------------------
    \3\ Federal Trademark Dilution Act of 1995, 104 H. Rpt. 374 
(referring to dilution by the introduction of KODAK pianos).
    \4\ Moseley at 123 S. Ct. 1115, 1123 (2003).
    \5\ ``The 2003 Tech Brand Scorecard'', Forrester Research, Inc.; 
Wholeview Technologies Research Brief, October 28, 2003.
    \6\ Robert Siegel, ``All Things Considered'', National Public 
Radio, September 25, 2003.
    \7\ Jim Zarroli, ``All Things Considered'', National Public Radio, 
September 25, 2003.
---------------------------------------------------------------------------
    Because the KODAK trademark is so important to our company, Mr. 
Chairman, I am grateful to have the opportunity to appear here today 
and share with the subcommittee the importance of the FTDA to Kodak and 
to recommend ways in which the statute should be revised.

             III. USING THE FTDA TO PROTECT THE KODAK MARK

    Just as Kodak has worked hard to establish the KODAK trademark, my 
colleagues and I work hard to strengthen and protect it. Kodak is proud 
of the high quality of the products and services it offers under the 
KODAK brand and we spend billions of dollars on manufacturing quality 
and improvements to deliver products and services worthy of the KODAK 
trademark. We also have spent millions of dollars registering KODAK as 
a trademark, understand its value, and are serious about protecting our 
ownership rights.
    The FTDA has been an important and effective part of our strategy 
in protecting the KODAK brand from blurring and tarnishing uses before 
it is irreparably damaged. To insure that we are able to take action 
under the FTDA before the damage has become irreparable it is important 
that Kodak and other owners of famous trademarks be able to stop uses 
that create a likelihood of dilution. For example, if we were faced 
with KODAK Condoms, KODAK Vodka or KODAK Escort Service, we would want 
to act quickly under the FTDA to obtain a preliminary injunction and 
stop these diluting uses at the earliest possible moment.

IV. THE SUPREME COURT DECISION IN MOSELEY AND ITS IMPACT ON USE OF THE 
                                  FTDA

    In the Moseley decision, the Supreme Court said that the statutory 
text of the FTDA leads to the conclusion that a famous mark owner must 
prove actual harm before a court issues an injunction in a dilution 
case. Mr. Chairman, an actual harm standard seriously undercuts the 
effectiveness of the statute.
    A trademark embodies the goodwill and reputation of the company 
that owns it and serves as the company's face to its customers and to 
the world. Reputations take years to build up but can be destroyed 
instantly, as we have seen all too often in the recent corporate and 
accounting scandals. If a corporation such as Kodak, which has built up 
its reputation over a period of a hundred years through billions of 
individual transactions and interactions with its customers, has to 
wait until it is able to prove actual harm before it can obtain an 
injunction to stop the dilution of its trademark, it would be too late. 
The damage would be irreparable.
    A requirement that Kodak show actual harm would mean spending 
months litigating at the potential cost of hundreds of thousands of 
dollars in legal and survey fees. But even more importantly, in the 
meantime the dilution would continue and the value of our trademark 
would be constantly diminishing at a huge cost that could not be 
calculated. Once the injunction was finally issued, the damage to our 
trademark would already have been done.
    In the real world, once the singularity of a famous mark has been 
blurred and the sterling reputation of the mark has been tarnished, the 
genie is out of the bottle and any court-ordered injunction or damages 
comes much too late. Our reputation would have been taken over by 
someone else and, by the time we were able to show actual harm, our 
reputation would never again be ours alone.

          V. KODAK SUPPORTS A LIKELIHOOD OF DILUTION STANDARD

    Kodak believes that the best way to assure the effectiveness of a 
federal dilution statute is to specifically incorporate a likelihood of 
dilution standard into the law.
    Such a standard allows the trademark owner to stop the damage to 
the distinctiveness of its famous trademark before it becomes 
irreparable. It insures that the singular meaning of the trademark--its 
unique identification with the trademark owner alone and nobody else--
will continue.
    I would like to illustrate this point with a hypothetical example 
that is based on real problems that Kodak has faced over the years. 
Because of the strong and positive reputation of the famous KODAK 
trademark and because it is so closely identified with photography, our 
KODAK brand often is used to identify photographs for which Kodak has 
had no involvement or responsibility.
    If Kodak were to be used as the name of a magazine containing 
photographs of child pornography the damage to Kodak's image as a 
family-oriented company that can be trusted with the pictures and 
memories of life's special moments is obvious. Obvious too is the 
damage to the KODAK trademark that would result from this misuse. 
However, if we were required to prove actual dilution, the sales of 
these magazines would continue and proliferate around the country. Even 
after we had shown actual dilution we never would be able to retrieve 
all those magazines. Our KODAK trademark would forever have been 
associated by everyone who saw those magazines with child pornography, 
not with our company and the products which we so proudly sell.
    Granting relief based on a showing of likelihood of dilution is 
essential for the owners of famous trademarks to enable them to quickly 
stop this kind of serious damage to their reputation and goodwill.

           VI. TARNISHMENT, BLURRING, AND THE FIRST AMENDMENT

    The Moseley decision also created ambiguity as to the protection 
that the FTDA offers against tarnishment. ``Tarnishment occurs when a 
famous trademark is linked to products of shoddy quality, or is 
portrayed in an unwholesome or unsavory context.'' \8\ The court in 
Moseley said: ``Whether it [tarnishment] is embraced by the statutory 
text . . . is another question.'' \9\
---------------------------------------------------------------------------
    \8\ 2 Jerome Gilson, Trademark Protection and Practice 
Sec. 5A.01[6], at 5A-55 (Rel. 50-December 2003).
    \9\ Moseley, 123 S. Ct. at 1124.
---------------------------------------------------------------------------
    To remedy this ambiguity, Kodak supports adding to the FTDA an 
express cause of action for likelihood of dilution by tarnishment.
    As long as the KODAK trademark has value there will be dishonest 
people out there who try to take advantage of it to make a quick buck, 
often in ways that disparage our valuable property. We see all too much 
of this in the Internet world, where unscrupulous scam artists use our 
KODAK trademark in the domain names of websites that tarnish our KODAK 
trademark and identity.
    Some recent examples are ``kodak.net'' as the domain name of a 
website linked to a gambling casino, ``kodaq.net'' for a professional 
male escort and ``kodakcompany.com'' for nude and lingerie models. 
Under some court decisions it is far from certain that such misuses 
would be held to be dilution by blurring, on the dubious ground that 
once websurfers go to the actual website it is clear what entity they 
are dealing with.
    The FTDA should be amended to make it clear that uses like these, 
which use our trademark in connection with unsavory activities and 
tarnish its value, constitute dilution.
    If there is a separate cause of action for likelihood of dilution 
by tarnishment, then it is reasonable that Congress also create a cause 
of action for likelihood of dilution by blurring. Whereas tarnishment 
focuses on a famous mark's reputation, a likelihood of dilution by 
blurring should address the loss of a famous mark's distinctiveness, 
specifically the capacity of the famous mark to stand as an identifier 
for a single source.
    This would address situations in which there is not a direct 
negative or derogatory connotation from the diluting use, but the 
second use serves to place into the public's mind an entity other than 
the original trademark owner. This blurs the distinctiveness of the 
famous trademark so that it no longer is associated with a single 
source.
    We faced this situation several years ago with a company that was 
using our trademark slogan ``A KODAK MOMENT'' as the punch line for 
greeting cards that it was selling. There was nothing obscene or 
derogatory about the cards, so they would not have been actionable 
under a tarnishment standard, but they did blur the distinctiveness of 
our KODAK trademark by associating it with the card manufacturer and 
its joke, rather than with Kodak as the owner of the mark and the 
source of all KODAK-branded products.
    For these reasons, both tarnishment and blurring should be 
explicitly listed as grounds for dilution in the FTDA.

                            VII. CONCLUSION

    Thank you, Mr. Chairman, for this opportunity to testify. Revising 
the FTDA is a matter of great importance to Eastman Kodak Company. We 
therefore ask for your support in passing the appropriate legislation 
and your assistance to Kodak and other U.S. companies in protecting 
their valuable trademark assets.

    Mr. Smith. Let me address my first question to all the 
panelists, but I am hoping for a very brief answer. The 
question is this. It is my understanding that the original 
Congressional intent when FTDA was written and passed was, in 
fact, to try to prevent actual damage or actual dilution, not 
just the likelihood of that. Of course, the Supreme Court last 
year said actual damages had to be proved rather than just the 
likelihood, whereas I think the Congressional intent was 
likelihood would be sufficient to trigger the statute.
    Do any of the panelists have a different view of the 
Congressional intent based upon their experience or based upon 
their reading ? Ms. Leimer?
    Ms. Leimer. No. I think that we certainly believe that from 
the very roots of dilution law, well before even the Federal 
Dilution Act, the concept of dilution was a whittling away of 
distinctiveness, and this is by its nature an incipient kind of 
harm.
    Mr. Smith. To me, the committee print is a codification of 
original Congressional intent, not a divergence from it.
    Ms. Leimer. And we agree completely with that.
    Mr. Smith. Mr. Sacoff?
    Mr. Sacoff. Mr. Chairman, if I understood the way you put 
it correctly, I believe you said that the intent behind the 
original act was a likelihood of dilution standard----
    Mr. Smith. That is correct.
    Mr. Sacoff.--and we agree with that assessment. I think 
that the actual reduction to a statutory text raised some 
questions, and I don't know how many amicus briefs were written 
in the Victoria's Secret case, but we believe this is a 
codification.
    Mr. Smith. The idea was to be able to act prior to the 
actual damage or dilution, not have to wait for that to occur.
    Mr. Johnson, that is a tough question for you, but leaving 
aside the constitutional question, do you at least agree that 
the original Congressional intent was a likelihood standard, 
not an actual damage standard?
    Mr. Johnson. I am not really sure what the Congressional 
intent was with regard to those two standards. I would note, 
however, that the States at that point had some that required 
actual and some that required likelihood, so----
    Mr. Smith. We were trying to clarify that.
    Mr. Johnson.--and so it was basically clear that there were 
at least two possibly competing standards. Congress put in the 
language actual damages, so the only thing I can conclude at 
that point is that apparently, given the language, that it was 
actual damages. But I wouldn't presume to say what was in 
Congress's mind at the time they enacted the statute.
    Mr. Smith. All right. And Mr. Stimson?
    Mr. Stimson. Mr. Chairman, I was involved in some of the 
drafting of the original statute and the passage of it and I 
can confirm that the intention of that statute was to cover 
likelihood of dilution.
    Mr. Smith. Thank you. My next question, Mr. Stimson, is for 
you and Ms. Leimer. In regard to Kodak and in regard to Kraft 
Foods, if we did not have FTDA, what would have happened to 
your trademarks? And the second part of that is that if we 
don't make the changes that we propose, what might happen in 
the future to the trademarks of your two companies? Mr. 
Stimson?
    Mr. Stimson. Well, I think, as I said in my testimony, the 
FTDA is a powerful tool for us, and that means often not that 
we necessarily have brought a lawsuit, but it does help us in 
cease and desist letters to stop the dilution at a very early 
stage, and so it has been a very useful means for us to stop 
dilution, and I can give several examples where we have been 
able to stop dilution before it gets to an advanced stage. So I 
think if we did not have that and if we were required to prove 
actual dilution, then I think we would be harmed, and to the 
extent that the dilution would continue for a much longer time, 
we would be damaged and there would be much more court costs 
for both parties.
    Mr. Smith. Thank you. Ms. Leimer?
    Ms. Leimer. We have the very same experience at Kraft that 
Kodak has had. We have some very famous marks and there have 
been a number of instances where third parties have tried to 
take advantage of them. The one most recently where we did have 
to bring a lawsuit was in a case where an individual commercial 
artist was using the name ``King Velveeda'' as the trademark 
for his business and his commercial art was sexually explicit. 
It was available on the website. We have children that visit 
our website because they like Velveeta. Their moms make their 
grilled cheese sandwiches out of it. And we felt it was very 
important that we preserve the very good name, and so we used 
the FTDA to control that man's using that name as a trademark 
for his business.
    Now, if he had said that he didn't like Velveeta, if he had 
had some issue with the product, the FTDA would not have 
covered that kind of comment. He was using the name as a 
trademark for his business.
    Mr. Smith. Okay. Thank you, Ms. Leimer.
    Mr. Sacoff, how would you respond to Mr. Johnson's visual 
example a while ago of Joe Camel, where he would suggest that 
the parody would be outlawed or punishable or contrary to law? 
Do you feel that that parody would, in fact, be prohibited or 
not?
    Mr. Sacoff. Well, I think if I were a judge, I would 
probably certainly deny a preliminary injunction if it is used 
in a speech content sort of way. I don't think the likelihood 
standard will impinge upon free speech in the parody area. 
First of all, parodies fall within the First Amendment and any 
Congressional statute obviously can't trump the First 
Amendment. Courts must apply the FTDA as they must apply other 
statutes in a manner to avoid constitutional issues if they 
can.
    We think that the exceptions and the permitted uses stated 
under the FTDA are satisfactory to protect free speech 
interests, and as I said before over the years, I don't think 
that the problems that the ACLU contemplates have materialized.
    Mr. Smith. And do you feel under the committee print that 
aspect of free speech would also be protected?
    Mr. Sacoff. I believe so.
    Mr. Smith. Okay. Thank you, Mr. Sacoff.
    Ms. Leimer. Mr. Chairman, I would like to address that, 
because I think the committee print actually expressly excludes 
the kind of example Mr. Johnson used, because under the 
committee print, the dilution cause of action necessarily 
involves a famous mark being compared against the trademark of 
the other party used to sell their goods or services. In this 
case, it is not being used for that. It is clearly being used 
for parody and for satire and for critical comment.
    Mr. Smith. And that is the intent. Thank you.
    Mr. Berman is recognized for his questions.
    Mr. Berman. Let us just follow up on that for a second. Mr. 
Johnson, what is your response to their notions, and I believe 
Ms. Leimer proposed--you proposed a suggested change, I think.
    Ms. Leimer. In the committee print, the requirement for the 
action to even be considered is that there be a comparison 
between the famous mark and the challenged mark, but it has to 
be a mark on the challenger's side being used as a trademark. 
So if the challenger, if the defendant is using the trademark 
to make comment, it doesn't even fall within the elements of a 
cause of action.
    Mr. Berman. Could you address whether or not your concern 
is answered by the comments of the other witnesses who reacted 
to it?
    Mr. Johnson. Yes, Mr. Berman. The problem is that 
currently, what you have is a non-commercial use exception, 
essentially----
    Mr. Berman. Yes.
    Mr. Johnson.--and that has been interpreted, unfortunately, 
very, very broadly, so that if any money incidentally happens 
to come into the hands of the person who is using this, it 
becomes a commercial use, according to the courts, or some of 
the courts, and then it loses the protection under the First 
Amendment that was designed under the FTDA. There is really 
not----
    Mr. Berman. And tell me, what did Joe Chemo--what was the 
commercial--remind me what the commercial----
    Mr. Johnson. They sell their magazine. They have a magazine 
where they publish what they call ``subvertisements,'' which is 
the Joe Chemo, and so they sell their magazine----
    Mr. Berman. Oh, in other words, people who want to see 
parody----
    Mr. Johnson. Right.
    Mr. Berman.--advertisements buy the magazine, and in the 
course of their using--I get it.
    Mr. Johnson. Right. So essentially, they are profiting from 
the parody, and as a result, as I said, some courts have said 
that because of their profiting from it, it no longer has that 
non-commercial aspect. If it is brought--now, what Ms. Leimer 
said, I think, does----
    Mr. Berman. By the way, why isn't that fair use?
    Mr. Johnson. Well, the problem is the fair use exception is 
only for comparative advertising, according to the FTDA. If you 
broadened to fair use----
    Mr. Berman. Oh, I see. In other words, if you were knocking 
Joe Camel cigarettes in your commercial, in your advertisement, 
that would be fair use. If you were saying----
    Mr. Johnson. Right. Under the FTDA, it has to be 
comparative advertising. So if you are comparing your 
cigarettes with Joe Camel, for instance, then clearly that 
would be comparative advertising and it may be considered fair 
use. But unfortunately, the fair use restriction that is placed 
in the FTDA is far too restrictive, so it doesn't encompass all 
of what most people would consider fair use.
    Mr. Berman. Response?
    Ms. Leimer. Mr. Johnson is correct that the courts have 
struggled with the defenses in the current FTDA and there have 
been a couple cases where a distinction was made between 
commercial and non-commercial that perhaps may not be a correct 
decision. The committee print, though, cures that problem. The 
committee print does now require that the dilution action would 
only apply when the other use, the second use, is used as a 
trademark for that party's goods and services. So anything that 
falls outside of that is not subject.
    Mr. Berman. Well, this magazine wasn't using Joe Chemo as 
its trademark, was it?
    Mr. Johnson. No, sir. It was essentially just part of the 
campaign that they were doing. It wasn't using it as their 
trademark.
    Ms. Leimer. So on--oh, I am sorry, Mr. Johnson.
    Mr. Johnson. I was just going to say, the language in the 
committee print is designation of source. Now, I wasn't clear 
exactly what designation of source meant when I was reading the 
committee print----
    Mr. Berman. I am not, either. What does that mean?
    Ms. Leimer. Well, it is a somewhat technical term in 
trademark jargon to mean using that word as a trademark, as a 
designation of source. But it is really just using it as a 
trademark to distinguish your goods and services.
    You were correct when you said, in this case, the magazine 
was not using Joe Camel as the trademark for the magazine and 
so it falls completely outside the realm of the dilution 
statute as provided in the committee print. It would be, 
frankly, a matter for summary judgment if a plaintiff--if Joe 
Camel, the owner of that trademark, brought this case, because 
of this change. This is an improvement that we think really 
balances the interests that we have been discussing.
    Mr. Berman. And do you feel it is an improvement?
    Mr. Johnson. I think it is an improvement, but I think what 
you need to do is spell out what you mean by designation of 
source. Since I wasn't clear what it was, I actually talked to 
some intellectual property law professors and said, what does 
this mean to you, and they were, like, we have no idea. So 
clearly, it is not something that is easily understood----
    Mr. Berman. They were patent lawyers.
    Mr. Johnson.--as to what we mean by designated source, so I 
would make that much clearer than what it is, or at least 
define it within the context of the statute.
    Mr. Berman. All right. Two other subjects that I would like 
to just ask about. I don't know if we are going to have a 
second round or not.
    Mr. Smith. Go ahead and take your time.
    Mr. Berman. I didn't read the Moseley case. I read a little 
summary of it. So what if some guy named Victor in Elizabeth 
Town, Kentucky, opens up a store--I don't know what they were 
selling and whether or not it was lingerie or sex objects or 
adult magazines or what--and calls itself ``Victor's Little 
Secret.'' I mean, only a moron is going to think that is 
Victoria's Secret. They may sort of catch what the guy is 
trying to do with his name as an attention-grabbing device, but 
so what? So what if some guy named Kodak starts an adult 
magazine that doesn't violate laws and has pictures in that 
magazine and the magazine is called ``Kodak''?
    In other words, how far do we go? There is some common 
sense here. What is the big confusion going to mean? How do you 
know that they went on that website because they liked Velveeta 
cheese? I mean, Justice Posner's skepticism about surveys 
brings to mind my skepticism about polling different aspects, 
not so much which kind they do favor, but the notion of things 
that go on in your mind and your associations, and when people 
are asked certain questions in these surveys, the notion that 
what they are saying to the survey taker is actually what 
happened originally. I am somewhat skeptical about myself.
    Just whoever wants to get into that, into the Jimmy Carter 
principle that life is not always fair. Are you guys being 
hypersensitive?
    Mr. Stimson. Mr. Berman, may I respond to that, since you 
used Kodak as an example?
    Mr. Berman. Yes.
    Mr. Stimson. I think the problem is that there is this 
blurring and there is this mental association that people will 
have, that they will associate, in your example, the Kodak 
trademark with somebody other than Kodak so that it ceases to 
become a single-source designator. When I say I am here this 
morning to testify on behalf of Kodak, you know exactly who I 
am here for. You are not saying, well, are you here for the 
imaging company? Are you here for the porno magazine? That is 
the kind of problem----
    Mr. Berman. You are here on behalf of the city fathers of--
isn't there a Kodak in Alaska or something? [Laughter.]
    Mr. Berman. Kodiak--confusion.
    Mr. Stimson. The problem here is not a question of 
confusion but it is the question of blurring and diluting the 
value of the mark which does belong to the trademark owner. It 
no longer signifies a single origin or source.
    You also asked about, so what if there is some small store 
in Kentucky? Well, dilution is designed to try to prevent this 
whittling away, which does start off often in a very small 
circumstance and protect marks in their incipiency before it is 
too late, before things do go to the point where it is 
impossible to get your reputation back.
    Mr. Berman. Yes, but Victor's Little Secret is not 
Victoria's Secret.
    Mr. Stimson. Well, I think one of the factors to look at is 
the similarity of the mark. So that is a question of fact, of 
whether--to what extent Victor's Little Secret is similar to 
Victoria's Secret, so that would be an issue, just as if 
somebody were using ``Bokak'' as opposed to Kodak. That would 
have to be something that would have to be determined.
    Mr. Berman. And can one actually tarnish the image of 
Victoria's Secret?
    Mr. Stimson. I won't get into that.
    Mr. Berman. Okay. [Laughter.]
    Mr. Berman. All right.
    Mr. Sacoff. From a policy standpoint, your question is a 
very good one, and I think the policy answer or the 
philosophical answer is there are two main areas of trademark 
law, trademark infringement law, which is based upon fraud and 
confusion rationales, and dilution law, which is not based upon 
confusion. It is based upon quasi-property sort of right and 
protecting the mark against whittling away by the death of a 
thousand cuts.
    In trademark infringement law, the answer to your question 
of how far do we go, the limiting factor is confusion. In 
trademark dilution law, the limiting factor, I think in 
response to your question, is fame. That is how we limit it. 
That is how we prevent it from being a runaway right. You 
narrow the universe of marks that this applies to. It makes a 
difference, I think, if you open up a phone book and look for 
Kodak and you find one or if you find two dozen or three dozen 
or four dozen. I think that difference has a consequence for 
the value of the trademark.
    Mr. Berman. Can I ask one last question?
    Mr. Smith. Yes.
    Mr. Berman. Three of you, at least, were sure you knew what 
Congressional intent was in the passage of that law. Justice 
Scalia doesn't even think what we think is Congressional intent 
counts for anything. If that was Congressional intent, why 
didn't we write ``likelihood of dilution''?
    Mr. Smith. Unclear language.
    Mr. Berman. What was unclear about the language? It didn't 
say likelihood. It said dilution. And all of you say, 
notwithstanding what we said, this was our intent. I am 
wondering how you are so sure about that. I mean, other than 
what--I understand you raised problems and we responded to it 
and chose--and since your problems involved likelihood of 
dilution, the fact that we responded by saying dilution, our 
response must have been wanted to solve your problem.
    Mr. Smith. I was going to direct your question to Mr. 
Stimson, because it sounded like he was an eyewitness based 
upon his testimony a few minutes ago.
    Mr. Stimson. Well, I can't answer directly why Congress did 
or did not do something in 1995. I can agree that the language 
of the statute as it is now is unclear, and that is what has 
led to this----
    Mr. Berman. Why is it unclear? It says dilution. I mean, 
yes, it says dilution, right? Causes dilution, not is likely to 
cause dilution.
    Mr. Stimson. Which is not consistent with my recollection 
and understanding of the intent. So you have a statute that----
    Mr. Berman. That doesn't mean that was our intent. It means 
we screwed up, but----
    Mr. Stimson. Well, I was trying to avoid saying that, but--
--[Laughter.]
    Mr. Stimson.--but I think there is a problem with this 
uncertainty, and that is why we are here today, to ask for 
language that will be clear, to give guidance to the courts and 
give guidance to parties on both sides so that they know the 
standard is specifically likelihood of dilution because the 
statute is not clear on that.
    Mr. Berman. I guess it sounds to me, even more so after 
hearing you, that what you are saying is substitute our clear 
language for the clear language you used before, which is okay, 
but I don't think we should shoehorn it in to fulfill our 
original goal by making this little technical correction.
    Mr. Stimson. I guess I would just say I would focus on 
clarity and certainty of results and guidance for people rather 
than language.
    Ms. Leimer. Maybe I could just add something. I think INTA 
has certainly been interested in this for many, many years. In 
fact, way back in 1988, there was a proposal from INTA to 
consider a Federal cause of action for dilution. Speaking with 
individuals involved in that and others outside the 
association, I think it was very clear that the doctrine was an 
incipient doctrine of dilution. I think there was agreement on 
that.
    I think what perhaps happened was some unfortunate choice 
of language. The language that probably appeared to be clear to 
represent that concept at the time, turned out, clearly by the 
Court's difficulty, not to be so clear.
    Mr. Sacoff. Congressman, in the ABA, we had a resolution on 
the eve of the Victoria's Secret case that said that, on one 
hand, the existing Federal statute should be interpreted by the 
Supreme Court in accordance with a likelihood of dilution 
standard, and in the alternative, if it turned out that it were 
not interpreted that way, that Congress should amend the 
statute to provide expressly a likelihood of dilution statute.
    Mr. Berman. When you pass a resolution about the Supreme 
Court should do it, do they follow?
    Mr. Sacoff. Well, they didn't follow it this time. The 
resolution is simply a policy basis for us to file the amicus 
curiae brief, which we filed, in which we urged a construction 
which we got one Justice to go along with but not the others, 
Justice Kennedy.
    Mr. Smith. Thank you, Mr. Berman. We will hope the Supreme 
Court will see the light of the new language, and that remains 
to be determined.
    This was very informative testimony today. Thank you all. 
We appreciate your time and your attention to a subject that I 
consider to be very important and we will move forward with 
this committee mark, I suspect, in the near future. So thank 
you all again.
    We stand adjourned.
    [Whereupon, at 11 a.m., the Subcommittee was adjourned.]


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