[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



                TRADEMARK DILUTION REVISION ACT OF 2005

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

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON COURTS, THE INTERNET,
                       AND INTELLECTUAL PROPERTY

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                                   ON

                                H.R. 683

                               __________

                           FEBRUARY 17, 2005

                               __________

                            Serial No. 109-2

                               __________

         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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                       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
DANIEL E. LUNGREN, California        ZOE LOFGREN, California
WILLIAM L. JENKINS, Tennessee        SHEILA JACKSON LEE, Texas
CHRIS CANNON, Utah                   MAXINE WATERS, California
SPENCER BACHUS, Alabama              MARTIN T. MEEHAN, Massachusetts
BOB INGLIS, South Carolina           WILLIAM D. DELAHUNT, Massachusetts
JOHN N. HOSTETTLER, Indiana          ROBERT WEXLER, Florida
MARK GREEN, Wisconsin                ANTHONY D. WEINER, New York
RIC KELLER, Florida                  ADAM B. SCHIFF, California
DARRELL ISSA, California             LINDA T. SANCHEZ, California
JEFF FLAKE, Arizona                  ADAM SMITH, Washington
MIKE PENCE, Indiana                  CHRIS VAN HOLLEN, Maryland
J. RANDY FORBES, Virginia
STEVE KING, Iowa
TOM FEENEY, Florida
TRENT FRANKS, Arizona
LOUIE GOHMERT, Texas

             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
BOB INGLIS, South Carolina           MARTIN T. MEEHAN, Massachusetts
RIC KELLER, Florida                  ROBERT WEXLER, Florida
DARRELL ISSA, California             ANTHONY D. WEINER, New York
CHRIS CANNON, Utah                   ADAM B. SCHIFF, California
MIKE PENCE, Indiana                  LINDA T. SANCHEZ, California
J. RANDY FORBES, Virginia

                     Blaine Merritt, Chief Counsel

                         David Whitney, Counsel

                          Joe Keeley, Counsel

                     Alec French, Minority Counsel


                            C O N T E N T S

                              ----------                              

                           FEBRUARY 17, 2005

                           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. Anne Gundelfinger, President, International Trademark 
  Association
  Oral Testimony.................................................     6
  Prepared Statement.............................................     7
Mr. Mark A. Lemley, William H. Neukom Professor of Law, Stanford 
  University
  Oral Testimony.................................................    18
  Prepared Statement.............................................    19
Mr. William G. Barber, Partner, Fulbright and Jaworski, LLP, on 
  behalf of the American Intellectual Property Law Association
  Oral Testimony.................................................    21
  Prepared Statement.............................................    23
Mr. Marvin J. Johnson, Legislative Counsel, American Civil 
  Liberties Union
  Oral Testimony.................................................    30
  Prepared Statement.............................................    31

                                APPENDIX
               Material Submitted for the Hearing Record

Prepared Statement of 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..........................................    49
Letter from Marvin J. Johnson, Legislative Counsel, American 
  Civil Liberties Union, in response to question from Rep. 
  Darrell Issa...................................................    51
Letter from Alan C. Drewsen, Executive Director, International 
  Trademark Association (INTA), and Michael K. Kirk, Executive 
  Director, American Intellectual Property Law Association 
  (AIPLA)........................................................    53
Letter from J. Jeffrey Hawley, President, Intellectual Property 
  Owners Association (IPO).......................................    59
Prepared Statement of Susan Barbieri Montgomery, Vice Chair, 
  Section of Intellectual Property Law, on behalf of the Section 
  of Intellectual Property Law of the American Bar Association...    60

 
                    TRADEMARK DILUTION REVISION ACT 
                                OF 2005

                              ----------                              


                      THURSDAY, FEBRUARY 17, 2005

                  House of Representatives,
              Subcommittee on Courts, the Internet,
                         and Intellectual Property,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 9:38 a.m., in 
Room 2141, Rayburn House Office Building, Hon. Lamar S. Smith 
(Chair of the Subcommittee) presiding.
    Mr. Smith. The Subcommittee on the Courts, the Internet, 
and Intellectual Property will come to order.
    Let me make a couple of announcements at the outset. First, 
I want to thank everyone for coming a little earlier than we 
expected. Originally, this Committee was set for 10:00, but 
because of the Judiciary Committee and Members being on the 
House floor for the class action bill, we are having to meet a 
little bit early. And, in fact, the class action bill's rule is 
expected to come up at 10:20. I don't expect it to be a 
problem, but just so you know, we are facing a little bit of a 
deadline when it comes to time. I still think we will be able 
to accommodate all Members and their questions and be finished 
by 10:20 or 10:30.
    Unfortunately, Professor Lemley, who is one of our 
witnesses, was not able to be contacted about the time change, 
so don't be surprised when he walks in and is a little bit 
surprised at 10:00, but we still expect to hear his testimony. 
We don't know where he is staying and haven't been able to make 
contact with him.
    This is our first hearing of the year and it is an 
important subject and I appreciate the interest of those who 
are in attendance in the audience as well as the Members who 
are here, too.
    Let me say at the outset what I think watchers of this 
Subcommittee already know, and that is that we intend to be 
just as active this year as we have been the last 2 years, 
which is to say that every week we are in session and there is 
no conflict with the full Judiciary Committee, we hope to have 
a hearing or a markup. Two weeks from now, for example, when we 
are back in session, we are scheduled to mark up four bills at 
that point. I have handed out to Members the schedule for the 
month of March and we will be on course and have an active 
Subcommittee during that time, as well.
    I am going to recognize myself for an opening statement, 
then the Ranking Member, and then we will proceed to hear from 
the witnesses.
    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 
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 their 
rightful owner and the 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.
    The Supreme Court's decision in the Mosley case, which 
largely focused on the standard of harm in dilution suits, 
compelled our Subcommittee last spring to review the FTDA and a 
Committee Print to amend it. The contents of the bill before 
us, H.R. 683, were largely culled from that Committee Print.
    For the most part, I do not believe the bill breaks new 
precedential ground. Rather, H.R. 683 represents a 
clarification of what Congress meant when it passed the 
dilution statute almost a decade ago.
    Enactment of this bill is a necessary need because it will 
eliminate confusion on key dilution issues that have increased 
litigation and resulted in uncertainty among the regional 
circuits. The primary components of H.R. 683 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 as a source designation of 
that person's goods or services, a mark that is likely to cause 
dilution by blurring or tarnishment.
    A mark may only be famous if it is widely recognized by the 
general consuming public in the United States as a source 
designation of the goods or services of the mark's owner. In 
determining whether a mark is famous, a court is permitted to 
consider all relevant factors, in addition to prescribed 
conditions set forth in the print, including the duration, 
extent, and geographic reach of advertising and publicity of 
the mark.
    H.R. 683 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.
    H.R. 683 further defines dilution by tarnishment as 
association between a source designation and a famous mark 
arising from their similarity that harms the reputation of the 
famous mark.
    The bill enumerates specific defenses to a dilution action: 
Fair use and comparative commercial advertising or promotion 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 H.R. 683 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, as 
well as destruction of the infringing articles under separate 
Lanham Act provisions.
    As a practical matter, H.R. 683 represents a tweak to the 
Committee Print from last year, which was largely based on the 
existing dilution statute.
    That concludes my opening statement and I will recognize 
the gentleman from California, Mr. Berman, for his.
    Mr. Berman. Thank you very much, Mr. Chairman. Since this 
is the first hearing of the Subcommittee this year and you once 
again at least outlined a daunting agenda, a hearing or a 
markup every week that we are in session, I want to tell you 
that notwithstanding that, I am really pleased to be back here 
and working with you. I do think we have accomplished a great 
deal under your leadership. We had some disappointments 
generated by the other body near the end of the session, but 
still accomplished a lot.
    I would like to introduce two new Members of the 
Subcommittee, Bill Delahunt, who is not on the Subcommittee 
this year, but two new Members on the Subcommittee. They are 
wonderful Members from California. They are not wonderful 
because they are from California, they are wonderful and happen 
to come from California, both great Members of the full 
Committee and of the House and good friends of mine, Adam 
Schiff of California and Linda Sanchez of California. I would 
note that they are new Members and they are also the only 
Members here at this particular hearing from our side of the 
aisle. That is not to say that familiarity with the 
Subcommittee breeds contempt. [Laughter.]
    In any event, I do look forward to working with you.
    We are here today to discuss H.R. 683, the ``Trademark 
Dilution Revision Act of 2005.'' I think the starting point for 
any dilution hearing is to understand the fundamental rationale 
behind the Federal Trademark Dilution Act and what the purpose 
of trademark law is generally.
    This isn't a typical intellectual property right. It 
doesn't emanate from the Constitution. It is just simply a 
construct of Congressional legislation. Its primary motivation 
and rationale rests on a policy not of protecting a property 
right, but of protecting consumers from mistake and deception.
    This is very different. That is trademark law. Now we are 
talking about this anti-dilution of trademark legislation. The 
goal of that is to protect only the most famous trademarks from 
subsequent uses that blur the distinctiveness of the mark or 
tarnish or disparage it. Dilution is a concern when an 
unauthorized use of a famous mark reduces the public's 
perception that the mark signifies something unique, singular, 
or particular. Anti-dilution laws, therefore, are really about 
protecting a property right, the actual trademark.
    If one of these marks causes confusion, then it is a 
trademark violation because it--and it hurts consumers. Here, 
we are talking about things to protect a property right.
    This is very different than the treatment of copyrights or 
patents, where we do so only for a limited period of time for 
the purpose of promoting innovation and creativity. In the case 
of anti-dilution laws, there is a potential to create a right 
in perpetuity for the trademark which may merely result in 
protecting the owner's economic interest. It was, therefore, 
initially intended for dilution to be used sparingly as an 
extraordinary remedy, one that required a significant showing 
of fame. However, now it seems as though dilution is used 
frequently as an alternative pleading in trademark litigation. 
Are we allowing the removal of far too many words from our 
vocabulary?
    One of our goals is to maintain the proper balance between 
fair competition and free competition. Therefore, I would like 
to take the opportunity at this hearing to further explore what 
consumer interests are met with the passage of this bill. I 
would like to address the change in the standard of dilution 
from actual to likelihood of dilution.
    I agree that if we were to maintain an actual dilution 
standard, as the Supreme Court held in the Victoria's Secret 
case, a number of difficult issues arise, including how one 
proves actual dilution without demonstrating lost profits. That 
is very difficult to do in these situations. 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 those who have been victims of dilution 
describe, death by a thousand cuts, where significant injury is 
caused by the cumulative effect of many small acts of dilution.
    So those are--I mean, I understand the motivation to go to 
likelihood of dilution, both to deal with the damages problem 
and to prevent that death by a thousand cuts.
    The bill suggests that the solution is to amend the 
standard from actual to likelihood of dilution. I appreciate 
the expressed need to impose a more lenient standard, as I 
indicated. The likelihood of dilution standard would no longer 
unfairly require the senior user to wait until injury occurs 
before bringing suit, and I think the Chairman is right. This 
is probably the standard Congress had initially intended.
    But I am not convinced at this point that a likelihood of 
dilution standard, when combined with the other amendments in 
the bill, does not create an aura of over-protection. Is there 
a standard that lies somewhere between likelihood of dilution 
and actual dilution?
    I suppose this issue may seem unimportant to many who are 
not entrepreneurs, but just the other day, I became aware of 
how pervasive the issue of dilution is. The Rock and Roll Hall 
of Fame has sued the Jewish Rock and Roll Hall of Fame for 
trademark dilution. The question really in this kind of a case 
is, in this new standard, would it extend the scope of 
trademark protection to marks that, like Rock and Roll Hall of 
Fame, merely describe the general nature of a product or 
service rather than a particular name or a particular 
geography?
    I am concerned about, perhaps most of all in terms of these 
issues, how this bill will affect first amendment and free 
speech issues. At the last hearing, the ACLU voiced concerns 
about the possibility that critics could be stifled by the 
threat of an injunction for mere likelihood of tarnishment. 
They were concerned with the balance between the rights of 
trademark holders and the first amendment.
    I am interested into delving into these issues and 
particularly to see whether these concerns are addressed in 
H.R. 683 and I look forward to hearing from the witnesses and 
working with the Chairman as we evaluate the Trademark Dilution 
Revision Act and any changes recommended at today's hearing and 
I yield back, Mr. Chairman.
    Mr. Smith. Thank you, Mr. Berman.
    It is customary for the full Committee as well as 
Subcommittees of the Judiciary Committee to swear in witnesses 
before they testify, so if you all would stand and raise your 
right hand, I will do that now.
    Do you swear that the testimony you are about to give is 
the truth, the whole truth, and nothing but the truth, so help 
you, God?
    Ms. Gundelfinger. I do.
    Mr. Lemley. I do.
    Mr. Barber. I do.
    Mr. Johnson. I do.
    Mr. Smith. Thank you. Our first witness is Anne 
Gundelfinger, President and Chairperson of the International 
Trademark Association. In addition to her duties at INTA, Ms. 
Gundelfinger serves as the Associate General Counsel and 
Director for Trademarks and Brands in Corporate Marketing Legal 
Affairs at Intel Corporation. Importantly for our purpose 
today, she was a member of INTA's Select Committee on the 
Trademark Dilution Act between 2003 and 2004. Ms. Gundelfinger 
is a graduate of the University of Virginia and the Boston 
University School of Law.
    Our next witness is William G. Barber, a partner in the 
Austin branch of Fulbright and Jaworski, where he specializes 
in trademark and competition litigation as well as domain name 
protection. He will be testifying on behalf of the American 
Intellectual Property Law Association. He is a double graduate 
of the University of Texas, perhaps the best public university 
in the country, with degrees in chemical engineering and law.
    Our next witness is Mark Lemley, Professor of Law and 
Faculty Scholar at Stanford and the director of that 
University's program in law, science, and technology. In 
addition to teaching intellectual property, computer, and 
Internet law and antitrust at Stanford, Professor Lemley is the 
author of six books, all in multiple editions, and more than 50 
law-related articles.
    Professor Lemley, I know we did not reach you to tell you 
about the time change, but thank you for being here. You came 
early and it turned out to work well.
    Mr. Lemley. It did.
    Mr. Smith. Professor Lemley received his undergraduate 
degree from Stanford and his law degree from Berkeley.
    Our final witness is Marvin Johnson, who testified at last 
year's hearing on dilution. He 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.
    We have written statements from you all, and without 
objection, your entire statements will be made a part of the 
record and we will look forward to your testimony today.
    Ms. Gundelfinger, we will begin with you.

   TESTIMONY OF ANNE GUNDELFINGER, PRESIDENT, INTERNATIONAL 
                     TRADEMARK ASSOCIATION

    Ms. Gundelfinger. Thank you, Mr. Chairman. Good morning. I 
am pleased to be here today as President of the International 
Trademark Association to offer support for H.R. 683, the 
``Trademark Dilution Revision Act of 2005.'' INDA is the 
largest trademark organization in the world and we thank you 
for your leadership on brand protection issues.
    INDA supports your bill because it fixes serious problems 
that have developed under the current law. Under the bill, 
dilution protection will be narrower, clearer, and more focused 
on the specific harm of dilution while providing owners of 
famous marks with a provable cause of action and protecting 
free speech. It strikes the right balance.
    The Federal Trademark Dilution Act of 1995, or the FTDA, 
was intended to stop at its incipiency the whittling away of 
the distinctiveness of a famous mark resulting from third-party 
uses on unrelated goods and services. Famous trademarks 
represent an enormous investment on the part of their owners 
and they deliver clear commercial messages to consumers who 
rely on them to make efficient purchasing decisions.
    Today, trademark dilution law in the United States is in 
need of repair. Nine years and hundreds of cases after the FTDA 
was enacted, virtually everyone--courts, litigants, 
commentators alike--agree that the law is a mess. While the 
statute has provided some measure of relief to owners of famous 
marks, we have split decisions on even the most basic dilution-
related questions, a near-complete lack of agreement or 
guidance on what it takes to prove dilution. In particular, the 
Supreme Court's holding in the Mosley case requiring proof of 
actual dilution has undermined the incipiency concept that is 
the heart of dilution protection.
    As a result, America's law to protect famous marks is now 
ambiguous, at best, and at worst, ineffective. This means more 
costly litigation, forum shopping, inconsistent application of 
the law, and greater risk to the ability of famous marks to 
function effectively as strong brands for their owners and for 
American consumers.
    Your bill, Mr. Chairman, brings order and clarity to 
dilution law. First, the bill provides a clear definition for 
what constitutes a famous mark, namely a mark that is widely 
recognized by the general consuming public of the United 
States. This language narrows and strengthens the fame 
requirement. Dilution protection was never meant for the 
average trademark. It was intended to provide extraordinary 
protection for extraordinary marks.
    Second, the bill protects famous marks from both blurring 
and tarnishment, thereby continuing the tarnishment protection 
that our jurisprudence has long recognized and rejecting the 
dicta in the Mosley opinion questioning whether tarnishment is 
covered by the law.
    Third, the bill adopts a likelihood of dilution standard 
rather than an actual dilution standard. This is essential. The 
actual dilution standard makes a dilution case simply 
unprovable as a practical matter and undercuts the incipiency 
concept that is at the heart of dilution protection.
    Fourth, the bill defines dilution as association between 
the famous mark and the junior mark that impairs the 
distinctiveness of the famous mark. The bill then provides a 
carefully crafted set of factors to assist a court in 
determining whether a famous mark's distinctiveness is likely 
to be impaired. INTA believes this is the right approach. The 
factors make it very clear indeed that a plaintiff must show 
impairment of the famous mark's overall distinctiveness in the 
marketplace, taking into account not only its inherent 
distinctiveness, but also its degree of recognition and the 
degree of substantially exclusive use.
    Finally, I would like to speak to the manner in which the 
legislation addresses free speech concerns. INTA believes that 
the existing statutory defenses to a dilution claim and the 
safeguards offered by the first amendment have generally 
protected defendants from overly broad application of the 
statute. However, it is an exceptionally muddy and difficult 
area of law with a lot of inconsistency and uncertainty.
    Accordingly, we agree with the approach taken in the bill, 
which provides more explicit language to provide support to the 
appropriate balance between trademark rights and free speech 
concerns, and therefore creates a more certain environment for 
famous mark owners to protect their intellectual property.
    The bill requires the defendant be using the challenged 
mark as a designation of source for its own goods or services. 
Designation of source is an accepted term of art in trademark 
law and it makes it very clear that both nominative and 
descriptive fair uses of famous marks, as well as parodies and 
satires, are not actionable, even if the brand owner doesn't 
like them. Further, we do not believe that designation of 
source inappropriately increases the burden on the plaintiffs. 
In the vast majority of cases, whether a defendant is using as 
a designation of source will be self-evident.
    In sum, INTA believes that your bill, Mr. Chairman, takes 
us where we need to go. It strikes the right balance and we 
urge its adoption and look forward to working with you to make 
that happen. Thank you.
    Mr. Smith. Thank you very much.
    [The prepared statement of Ms. Gundelfinger follows:]

                Prepared Statement of Anne Gundelfinger

                            I. INTRODUCTION

    Good morning, Mr. Chairman. My name is Anne Gundelfinger. I am 
associate general counsel and director for trademarks & brands and 
corporate marketing legal affairs at Intel Corporation. I 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 your bill, Mr. Chairman, H.R. 683, the Trademark 
Dilution Revision Act of 2005. We are grateful for your leadership. 
INTA agrees that adoption of this legislation will provide a narrower, 
clearer, and more focused statute that addresses the specific harm of 
dilution, while providing owners of famous marks a provable cause of 
action. At the same time, the legislation protects free speech. Our 
position is based on a comprehensive study of dilution law that was 
undertaken by a select committee of trademark experts and subsequently 
approved by our board of directors. The select committee was organized 
after the U.S. Supreme Court decision in Moseley v. V Secret Catalogue, 
Inc.,\1\ in which the court addressed a number of dilution issues, 
particularly the standard of proof for a dilution claim.
---------------------------------------------------------------------------
    \1\ 123 S. Ct. 1115 (2003).
---------------------------------------------------------------------------
    INTA is a 127-year-old not-for-profit organization comprised of 
over 4,500 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 manufacturers, 
service providers, 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,\2\ the Anticybersquatting Consumer Protection 
Act of 1999,\3\ the Trademark Law Treaty,\4\ the Madrid Protocol 
Implementation Act,\5\ and most recently the Fraudulent Online Identity 
Sanctions Act.\6\
---------------------------------------------------------------------------
    \2\ See 134 Cong. Rec. S. 16974 (daily ed. Oct. 20, 1988) 
(statement of Sen. DeConcini).
    \3\ 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).
    \4\ See H.R. Rep. No. 412, 106th Cong. 1st Sess. (1999).
    \5\ See 126 Cong. Rec. S. 9690 (daily ed. October 1, 2002) 
(statement of Sen. Leahy).
    \6\ See Legislative Hearing on H.R. 3754, the Fraudulent Online 
Identity Sanctions Act, February 4, 2004, at http://
judiciary.house.gov/Hearings.aspx?ID=57 (testimony of J. Scott Evans, 
chair, INTA Internet Committee).
---------------------------------------------------------------------------
                II. DILUTION AND THE HISTORY OF THE FTDA

    The Federal Trademark Dilution Act (FTDA) became law on January 16, 
1996.\7\ INTA was a leading proponent of its passage.\8\ We felt that a 
federal statute for enhanced protection of famous marks from dilution 
was needed because famous marks ``foster a lasting psychological grip 
on the public consciousness,'' \9\ have a value that is 
``incalculable,'' \10\ and possess an ``unseen but dynamic pull'' \11\ 
on consumers. Famous marks ``are the voices of American assurance, the 
best America has to offer, and carry a certain sense of history.'' \12\
---------------------------------------------------------------------------
    \7\ Pub. L. No. 104-98, 109 Stat. 505 (1995).
    \8\ See H.R. Rep. No. 104-374, 104th Cong. 2nd Sess. (1995) (noting 
use of testimony from INTA's executive vice president).
    \9\ The United States 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).
    \10\ Id.
    \11\ Id.
    \12\ Steve Hartman, Brand Equity Impairment--The Meaning of 
Dilution, 87 Trademark Rep. 418, 420 n.5 (1997).
---------------------------------------------------------------------------
    Because of their qualities, famous marks are the marks most 
``susceptible to irreversible injury from promiscuous use.'' \13\ In 
particular, extremely well-known marks generate copying; third parties 
adopt such marks for their own goods and services much more frequently, 
not necessarily to deceive, but rather for the positive associations 
that such marks carry. A classic example of conduct that would 
constitute dilution, as used by Frank I. Schechter in his 1927 seminal 
article on trademark dilution, would be KODAK for bathtubs and 
cakes.\14\ The injury that occurs is the ``gradual whittling away or 
dispersion of the identity and hold upon the public mind of the mark or 
name by its use on non-competing goods.'' \15\
---------------------------------------------------------------------------
    \13\ Supra note 9 at 455.
    \14\ Frank I. Schechter, The Rational Basis of Trademark 
Protection, 40 Harv. L. Rev. 813 (1927), as reprinted in 60 Trademark 
Rep. 334, 344 (1970).
    \15\ Id. at 342
---------------------------------------------------------------------------
    Accordingly, the FTDA 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,'' 
\16\ ``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.'' \17\ The statute also sets forth 
criteria that a court should consider in determining whether a mark is 
famous; \18\ establishes an injunction as the primary form of relief; 
\19\ and provides statutory defenses to a dilution claim.\20\ In 1999, 
Congress added dilution as grounds for opposition to a trademark 
application and cancellation of a trademark registration.\21\
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    \16\ 15 U.S.C. Sec. 1125(c)(1).
    \17\ Id. at Sec. 1127.
    \18\ Id. at Sec. 1125(c)(1)(A)-(H).
    \19\ Id. at Sec. 1125(c)(1).
    \20\ Id. at Sec. 1125(c)(4)(A)-(C).
    \21\ Pub. L. No. 106-43.
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                 III. THE NEED FOR REVISION OF THE FTDA

    The owners of famous trademarks are indeed grateful for the 
protection that the FTDA has provided for their intellectual property. 
The FTDA has provided some measure of relief and has put others on 
notice that adoption of famous marks as their own is impermissible. But 
now, more than nine years after passage of the FTDA, a Supreme Court 
decision interpreting the statute, and numerous lower court decisions 
that demonstrate division on key dilution-related concepts, trademark 
owners believe it necessary to step back and evaluate America's 
trademark dilution law. Our evaluation has revealed the following:
    (1) A Problematic Standard for Proving Dilution. First and 
foremost, dilution, as a practical matter is very difficult to prove 
under the current statute. Congress has provided a cause of action to 
remedy the harm of dilution, and the Supreme Court has interpreted it 
in a manner that makes it at best ambiguous and at worst nearly 
impossible to establish. The requirement imposed by the Supreme Court 
in the Moseley decision that ``actual dilution'' be proved would seem 
to require a showing that measurable dilutive harm has occurred, i.e., 
that the mark has been measurably impaired.\22\ However, such a 
standard is completely at odds with Congress' intent--to prevent 
dilution at its incipiency, before measurable damage to the mark has 
occurred.\23\ By the time measurable, provable damage to the mark has 
occurred much time has passed, the damage has been done, and the 
remedy, which is injunctive relief, is far less effective.
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    \22\ The Supreme Court did allow that measurable harm may not need 
to be proved by direct evidence in cases where the junior mark is 
``identical'' to the senior mark, but expressly refused to elaborate on 
what proof would be required. Moseley v. V Secret Catalogue, Inc., 123 
S. Ct. 1115 at 1124.
    \23\ H.R. Rep. No. 104-374, supra note 8 (``The [dilution] 
provision is intended to protect famous marks where the subsequent, 
unauthorized commercial use of such marks by others dilutes the 
distinctiveness of the mark. . . . [D]ilution is an infection, which if 
allowed to spread, will inevitably destroy the advertising value of the 
mark.'') (citation omitted).
---------------------------------------------------------------------------
    (2) Division On What Constitutes a Famous Mark. While Congress 
explicitly limited the scope of the FTDA's protection to ``famous'' 
trademarks, the statute does not define ``fame.'' Instead, there are 
eight nonexclusive factors that a court may consider when determining a 
trademark's fame. As a result, courts are hopelessly split on what 
constitutes a famous mark. Courts in six of the twelve federal 
circuits, for example, have adopted a niche market theory of fame, 
which allows owners to protect trademarks from dilution if they can 
prove fame in a particular consumer market or localized area, even if 
the market or area is quite small and not widely known to 
consumers.\24\ In contrast, courts in three other circuits have 
specifically rejected niche market fame, instead requiring that a mark 
be well-known in a broad geographic area or market.\25\ Courts in the 
remaining three circuits have not yet addressed whether niche fame is 
sufficient to support a dilution claim.\26\
---------------------------------------------------------------------------
    \24\ The niche market theory of fame has been accepted by courts in 
the following circuits: Third (Times Mirror Magazines, Inc. v. Las 
Vegas Sports News, L.L.C., 212 F.3d 157, 166 (3d Cir. 2000)); Fourth 
(Rhee Bros., Inc. v. Han Ah Reum Corp., No. CIV. AMD 01-1894 (D. Md. 
2001)); Fifth (Advantage Rent-A-Car, Inc. v. Enterprise Rent-A-Car, 238 
F.3d 378, 381 (5th Cir. 2001)); Sixth (NBBJ East Ltd. P'shp v. NBBJ 
Training Acad., Inc., 20 F. Supp. 2d 800 (S.D. Ohio 2001)); Seventh 
(Simon Property Group, L.P. v. mySimon, Inc. ( 2000 WL 1206575 (S.D. 
Ind. 2000)); and Ninth (Thane Int'l, Inc. v. Trek Bicycle Corp., 305 
F.3d 894 (9th Cir. 2002)).
    \25\ The niche market theory has been rejected in the following 
circuits: Second (TCPIP Holding Co. v. Haar Comms., Inc., 244 F.3d 88, 
99 (2d Cir. 2001)); Eighth (Heidi Ott A.G. v. Target Corp., 153 F. 
Supp. 2d 1055 (D. Minn. 2001); and Eleventh (Caruso & Co., Inc. v. 
Estafan Enters., Inc., 994 F. Supp. 1454 (S.D. Fla.), aff'd without 
dec., 166 F.3d 353 (11th Cir. 1998)).
    \26\ First, Tenth and Federal Circuits.
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    (3) A Split on Whether to Protect Famous Marks with Acquired 
Distinctiveness. At least one court has specifically reserved 
protection under the FTDA only for those famous marks that are 
inherently distinctive, namely marks that are coined, arbitrary or 
suggestive, e.g., KODAK, and has held that marks that were initially 
descriptive but have acquired distinctiveness or ``secondary meaning'' 
simply do not qualify (no matter how well-known they are).\27\ The 
majority of courts, in contrast, have held that a famous mark that has 
acquired distinctiveness through many years of extensive sales, 
advertising and/or promotion, is also worthy of protection against 
dilution.\28\
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    \27\ TCPIP Holding Co. v. Haar Comms., Inc., 244 F.3d 88, 95 (2d 
Cir. 2001).
    \28\ See, e.g., Ringling Bros.-Barnum & Bailey Combined Shows, Inc. 
v. Utah Div. of Travel Dev., 955 F. Supp. 605 (E.D. Va. 1997), aff'd, 
170 F.3d 449 (4th Cir. 1999); Times Mirror Magazines, Inc. v. Las Vegas 
Sports News, L.L.C., 212 F.3d 157 (3d Cir. 2000). See also Binney & 
Smith v. Rose Art Indus., 60 U.S.P.Q.2d 2000 (E.D. Pa. 2001) 
(establishing fame of Crayola color scheme, citing over $200 million in 
advertising expenditures over five years, as well as advertising dating 
back forty years).
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    (4) A Question on Whether Tarnishment Is Covered Under the FTDA. 
Tarnishment, along with blurring, has long been regarded by trademark 
scholars as one of the ``two different dimensions'' of dilution.\29\ 
And, in fact, the legislative history for the FTDA specifically states 
that the statute covers tarnishment.\30\ However, in the Moseley 
decision, the Supreme Court in dicta questioned whether dilution by 
tarnishment is actionable. 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.\31\
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    \29\ 4 J. Thomas McCarthy, McCarthy on Trademarks and Unfair 
Competition Sec. 24:67, at 24-128 (4th ed. 2003). See also 2 Jerome 
Gilson, Trademark Protection and Practice Sec. 5A.01[2], at 5A-7 
(December 2003).
    \30\ H.R. Rep. No. 104-374, supra note 8 (``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.'').
    \31\ Moseley v. V Secret Catalogue, Inc., 123 S. Ct. 1115 at 1124 
(citing 15 U.S.C. Sec. 1125(c)(1)). Also, trademark professionals had 
previously raised the same concern. See, e.g., Miles J. Alexander, 
``Dilution Basics,'' Law and Contemporary Problems, reprinted and 
delivered at the INTA Dilution and Famous Marks Forum, March 5-6, 1997, 
15. (``[T]he definition of dilution in the federal statute does not 
specifically mention such a negative association [with the famous 
brand].'').
---------------------------------------------------------------------------
    As the examples above demonstrate, dilution law in the United 
States is moving in every direction except the one that it needs to--
forward. Of even greater concern is the Supreme Court's holding on the 
requirements for proving a dilution claim. All the while, famous marks 
and their value both to consumers and their owners remain at risk from 
blurring and tarnishment, and third parties have little guidance 
regarding what marks they can safely adopt without risk of dilution 
liability. The lack of clarity in the law and the splits in the various 
circuits are resulting in forum shopping and unnecessarily costly 
lawsuits. For these reasons a revision of dilution law is needed.

     IV. H.R. 683 PROVIDES FOR A CLEAR, WELL-DEFINED DIRECTION FOR 
                        DECIDING DILUTION CASES

    H.R. 683 builds on the lessons we have learned and puts dilution 
law on the right path. Like the existing FTDA, it recognizes that 
famous marks require special protection because of the ``abundant good 
will and consumer loyalty'' \32\ they inspire and because they are the 
targets of copying and promiscuous use. But, unlike the current 
statute, the legislation makes sure that dilution will not be treated 
as a just another claim to be added to a lawsuit. Instead, as I noted 
earlier, with the passage of H.R. 683, America's trademark dilution law 
will be narrower, clearer, and more focused on addressing the specific 
harm of dilution, while providing owners of famous marks a provable 
cause of action, and protecting free speech. To explain why INTA 
believes this to be the case, I have divided our analysis of the bill 
into four sections: ``Qualifications for Protection,'' ``Blurring and 
Tarnishment,'' ``Safeguarding Free Speech,'' and ``Relief and 
Preemption.''
---------------------------------------------------------------------------
    \32\ 2 Gilson, supra note 29, Sec. 5A.01[4][a], at 5A-10 (July 
2004).
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A. Qualifications for Protection
            1. Standard for Fame
    H.R. 683 correctly remedies the judicial schism identified above on 
what is meant when we use the phrase ``famous mark.'' It is explicitly 
and necessarily narrow in scope. The proposed definition protects only 
those marks that are ``widely recognized by the general consuming 
public of the United States.'' This new, clear standard will ensure 
that the broad protections against dilution provided for in the statute 
are available only to a limited group of marks that are genuinely 
famous and for which promiscuous use would be most damaging.\33\
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    \33\ ``[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. For 
localized famous marks, state dilution laws can afford adequate 
protection of the senior user's mark; for marks used only in narrow 
industries and known only to narrow ranges of consumers, infringement 
and unfair competition laws, such as section 43(a) of the Lanham Act, 
will provide appropriate protection.

            2. Factors for Determining Fame
    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 mark's 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.\34\
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    \34\ 15 U.S.C. Sec. 1125(c)(1).

    H.R. 683 proposes that the existing fame factors be simplified and 
replaced with non-exclusive factors that are more narrowly focused on 
identifying marks that are ``widely recognized by the general consuming 
---------------------------------------------------------------------------
public of the United States.'' These factors are:

        (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.

    We agree with these proposed changes. The first and second factors 
reflect traditional concepts of marketplace recognition that courts 
have applied for decades in determining fame, and they 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 unsolicited media 
coverage, and other evidence of actual recognition.
    Some of the factors contained in the current statutory test are 
omitted from H.R. 683. This is acceptable since they are already 
accounted for in the definition itself, or are, in our view, not 
relevant to the issue of fame. For example, since the 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 agree that it should be 
omitted as well.
    H.R. 683 also correctly resolves the split in the circuits 
identified above as to whether marks with acquired distinctiveness can 
be protected against dilution. The bill makes clear that marks with 
acquired distinctiveness can be protected. We agree that a mark with 
acquired distinctiveness should be worthy of protection against 
dilution, as long as the other prerequisites for dilution protection 
can be met.\35\
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    \35\ See text accompanying supra note 28.
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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. H.R. 683 is clear on what constitutes a likelihood of 
dilution by blurring and what constitutes likelihood of dilution by 
tarnishment.

            1. The Incipient Nature of Dilution
    As noted above, the Supreme Court ruled, ``the text [of the FTDA] 
unambiguously requires a showing of actual dilution, rather than a 
likelihood of dilution.'' \36\ 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.\37\ 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.\38\ Unfortunately, the court provided little guidance on how 
one might prove actual dilution.
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    \36\ Moseley v. V Secret Catalogue, Inc., 123 S. Ct.1115 at 1124.
    \37\ Id., citing 15 U.S.C. Sec. 1125(c)(1) (emphasis added).
    \38\ 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)).
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    INTA submits that a dilution cause of action should not require 
hard proof of actual damage to the mark. This approach, which the 
Supreme Court appears to have 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 and the 
express intent of Congress in enacting the FTDA.\39\ In the opinion of 
INTA, the owner of a famous mark should be able to obtain an injunction 
against the first offending use because even the first use begins the 
process of dilution, regardless of whether that use has 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 the damage is already 
done.
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    \39\ H.R. Rep. No. 104-374, supra note 8 (``The [dilution] 
provision is intended to protect famous marks where the subsequent, 
unauthorized commercial use of such marks by others dilutes the 
distinctiveness of the mark. . . . [D]ilution is an infection, which if 
allowed to spread, will inevitably destroy the advertising value of the 
mark.'') (citation omitted).
---------------------------------------------------------------------------
    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 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 such a mark, a court could apply the laches defense, 
effectively eviscerating the protections of the dilution statute. The 
present FTDA, as interpreted by the Supreme Court, thus presents the 
plaintiff with a Catch 22: sue too early and lose because the harm is 
not yet provable, or sue too late and lose on laches grounds.
    Finally, we also note that the Lanham Act does not require a 
showing of actual confusion to support infringement; a plaintiff does 
not need to show actual confusion or lost sales. Likewise, famous marks 
should not need to show an actual damage to the mark before qualifying 
for dilution protection.
    H.R. 683 expressly establishes the right standard for proving a 
dilution claim--a likelihood of dilution standard. A likelihood of 
dilution standard is the most practical way to express the incipient 
nature of dilution in a manner a court will understand; 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
    H.R. 683 proposes a new statutory approach to addressing a claim of 
likelihood of dilution by blurring. The bill would 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, or for some other 
reason. Moreover, it is association that is likely to impair the 
distinctiveness of the famous mark in the marketplace.
    INTA supports this test. In particular, we agree that likely 
impairment of a famous mark's distinctiveness should be the measure 
used by courts in blurring cases. Courts have long understood that the 
principal harm caused by dilution by blurring is the whittling away of 
a mark's distinctiveness.
    In this context, we refer not merely to the degree of inherent 
distinctiveness, but rather its overall distinctiveness in the 
marketplace. A mark must have distinctiveness in the marketplace in 
order to be capable of being diluted. This marketplace distinctiveness 
arises from the mark's degree of inherent distinctiveness, its degree 
of fame, and the degree to which it has been substantially exclusively 
used, all of which contribute to its association with a single source 
and/or particular brand attributes. The more the famous mark is 
inherently distinctive and the more the famous mark is used 
exclusively, the more likely it will be diluted or ``blurred'' by use 
of an identical or similar mark. This is because continued use of the 
junior mark will necessarily impair, over time, the famous mark's 
association with the mark owner and/or the various brand attributes 
that the mark owner has built up in the mark. This is the essence of 
blurring.
    Let us take Intel's PENTIUM mark as an example. (I use PENTIUM as 
an example not to promote it here as a famous mark, but rather because 
I do not presume to borrow another company's mark for this example.) 
Assume that PENTIUM, one of Intel's premium brands for microprocessors, 
is a mark that is ``widely recognized by the general consuming public 
of the United States.'' Intel is in the computer industry, and the 
PENTIUM brand has brand attributes that include cutting-edge 
technology, premium performance, and integrity. If a third party were 
to adopt the PENTIUM mark for real estate brokerage services or 
sportswear, not only would the singular association between Intel and 
its PENTIUM brand be lost over time, but its brand attributes would be 
blurred and dampened by the brand attributes of the decidedly un-high-
tech brokerage services and/or sportswear ? consumers would learn over 
time to distinguish between the different PETNIUM brands, their 
sources, and their brand attributes. In short, dilution would be highly 
likely, even if the impairment to the PENTIUM mark takes years to 
manifest. As noted earlier, the point is to stop the impairment before 
the damage is done.
    On the other hand, if a famous mark has little or no inherent 
distinctiveness and is commonly used by numerous companies such that 
consumers have learned to understand that the mark is associated with 
multiple companies and multiple brand attributes, e.g., AMERICAN, then 
it is unlikely that the famous mark will be blurred by yet another use. 
This is precisely because consumers have already learned to distinguish 
between the multiple marks and their brand attributes.
    INTA did consider whether the standard for blurring should be 
impairment of ``uniqueness'' or ``singularity,'' particularly given 
that the ultimate harm that occurs when a mark is blurred could 
arguably be described, as least in part, as impairing the singularity 
of the mark's association with a single source. However, INTA believes 
this approach is flawed for several reasons.

          First, the damage done by blurring is not merely the 
        impairment of the famous mark's singular association with its 
        source. There is also the impairment of the famous mark's 
        association with particular brand attributes.

          Second, proving impairment of a famous mark's 
        association with a single source would raise the same sorts of 
        proof problems that we have under today's standard--the harm is 
        not measurable until long after the damage has been done.

          Third, neither ``singularity'' nor ``uniqueness'' 
        have any established meaning in trademark jurisprudence and 
        could be subject to serious misinterpretation. In particular, 
        courts might require the famous mark to be literally unique or 
        singular. If a mark must be unique or singular in order to be 
        blurred, courts may end up finding that a mark must be a coined 
        term to qualify for protection, or they may find that any 
        evidence of third party use, no matter how localized or de 
        minimus, will prevent a finding of dilution.

    INTA believes that the best means of expressing what needs to be 
proved by a plaintiff in a blurring case is an impairment of the 
distinctiveness of the mark. ``Distinctiveness'' is well-understood in 
the trademark jurisprudence, and any other formulation would be subject 
to dangerous misinterpretation. Mr. Chairman, your bill takes the right 
approach here.

            3. Blurring Factors
    INTA believes that factors would assist courts in determining 
whether there is likely to be an impairment of the distinctiveness of 
the famous mark, and accordingly agree with H.R. 683's list of non-
exclusive factors. Without factors, we are likely to end up with even 
more judicial division and inconsistency.\40\ The factors in H.R. 683 
comport with decades of dilution decisions in state and, more recently, 
federal courts. A court will need to balance all of these factors, as 
well as any others relevant to the question of blurring, in order to 
make a determination as to whether there is a likelihood of dilution by 
blurring. As noted above, all of these factors go to the question of 
whether the famous mark's distinctiveness in the marketplace will be 
blurred by the junior use. The factors proposed in your bill, Mr. 
Chairman, are:
---------------------------------------------------------------------------
    \40\ Those circuit courts that have provided lists of factors for 
the district courts in their circuits have come up with wildly 
divergent lists, highlighting the need for greater national consistency 
in the application of factors for a determination of dilution. For 
example, the Seventh Circuit has held that only two factors are 
relevant to a finding of blurring--the similarity of the marks and the 
renowned of the famous mark, Eli Lilly & Co. v. Natural Answers, Inc., 
233 F.3d 456, 466 (7th Cir. 2000)--whereas the Second Circuit has held 
that, among the relevant factors are the degree of distinctiveness of 
the senior mark; the similarity of the marks; the proximity of the 
products and likelihood of bridging the gap; the interrelationship 
among the distinctiveness of the senior mark, the similarity of the 
junior mark, and the proximity of the products; the extent of overlap 
among the parties' consumers and the geographic reach of their 
products; the sophistication of consumers; the existence of any actual 
confusion; the adjectival or referential quality of the junior use; the 
potential harm to the junior user and the existence of undue delay by 
the senior user; and the effect of the senior user's prior laxity in 
protecting the mark. Nabisco Inc. v. PF Brands Inc., 191 F.3d 208 (2d 
Cir. 1999).

        (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 more 
similar the marks, or if they are identical, the more likely it is that 
the junior mark will impair the association of the senior mark with its 
source and/or its particular brand attributes.
    The second factor is the degree of inherent or acquired 
distinctiveness of the famous mark. The more inherently distinctive and 
memorable the mark, the more it is likely to be blurred by the use of 
other identical or similar marks. The more 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 similar or identical trademarks already exist 
in the marketplace such that consumers already have learned to 
associate the mark with multiple sources and/or sets of brand 
attributes. If, for example, the famous mark is in substantially 
exclusive use, it would indicate that the mark's distinctiveness is 
more likely to be impaired by the junior use. Conversely, where other 
similar marks are already in wide use and have been over a lengthy 
period of time, it may be 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. In sum, the mark need not be unique 
in the marketplace in order to qualify for dilution protection, but it 
cannot be common either.
    Factor four, 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 and the more likely that the 
association will impair the distinctiveness of the mark , i.e., its 
association with a single source and/or a single set of brand 
attributes.
    The fifth factor considers whether the defendant intended to trade 
on the recognition of the famous mark. In such cases, the defendant 
presumably used the junior mark with the expectation that consumers 
would associate its mark with the famous mark. Such intent operates as 
an admission by the defendant that the senior mark has a sufficient 
degree of fame and marketplace distinctiveness such that the mark can 
be blurred, and that the defendant sought to appropriate that fame and 
distinctiveness to itself in order to direct consumers' attention 
toward its own business.
    The last factor, actual association, refers to survey evidence and 
other evidence that association is actually occurring (e.g., direct 
consumer association or confusion).

            4. Dilution by Tarnishment
    In light of the ambiguity created by the Supreme Court's dicta 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. Other than in cases that implicate free speech 
interests (discussed below), owners of famous trademarks should be able 
to protect their significant investment against negative associations. 
For example, Coca-Cola Co. should not have to have its reputation 
tarnished by the sale of powdered candy, designed to look like cocaine, 
in bottles that copy the famous undulating shape of Coca-Cola soda 
bottles.\41\ H.R. 683 would make explicit what is implicit in the 
current statute: courts should find liability for tarnishment if a 
junior use were 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. We 
therefore support its inclusion.
---------------------------------------------------------------------------
    \41\ Coca-Cola Co. v. Alma-Leo U.S.A., Inc., 719 F. Supp. 725, 12 
U.S.P.Q.2d 1487 (N.D. Ill. 1989).
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C. Safeguarding Free Speech
    When it adopted the FTDA in 1996, Congress did not want the statute 
to extend so far as to hinder legitimate First Amendment activity. 
Thus, Section 43(c)(4) of the Lanham Act was added to address such 
First Amendment concerns. Although the First Amendment obviously trumps 
a dilution claim, Section 43(c)(4) expressly lists specific activity 
that shall not be actionable as a claim for dilution:

        (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.

    As expected, courts have used these defenses and the protections 
offered by the First Amendment to protect defendants from a broad 
application of the dilution laws.\42\ Nevertheless, we agree with the 
approach taken in H.R.683, which provides more explicit language to 
support this trend in the case law and further assists judges by making 
clear which types of uses are not meant to be covered by the revised 
dilution statute. The bill expressly states that, as an essential 
element of the cause of action for dilution, whether for dilution by 
blurring or dilution by tarnishment, the plaintiff must demonstrate 
that the defendant is using the challenged mark or name as a 
``designation of source'' for the defendant's own goods or services.
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    \42\ See, e.g., Mattel, Inc. v. MCA Records, Inc., 28 F. Supp. 2d 
1120 (C.D. Cal. 1998), aff'd 296 F.3d 894, 905 (9th Cir. 2002) (The 
defendant's song ``Barbie Girl'' was intended to satirize the famous 
doll. The court found the use to fall outside commercial use and noted 
in dicta that ``the fact that defendant's product makes a profit or is 
successful . . . does not affect the protections afforded to it by the 
First Amendment.'') Id. at 1154 n.54. See also, Charles Atlas, Ltd. v. 
DC Comics, 112 F. Supp. 2d 330 (S.D.N.Y. 2000) (The defendant created a 
comic vignette in one of its regular series of comics similar to that 
used for years by plaintiff in its advertisements. Although the 
dilution claim was dismissed because the statute of limitations had run 
out, the court noted that the claim would have failed anyway because 
the defendant's comic strip was protected under the First Amendment, as 
the use was not to advance a competing product, but instead as part of 
a storyline used to convey an idea through an artistic work. The court 
also noted that the defendant's strip included parody-like elements.).
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    ``Designation of source'' is an accepted term of art in trademark 
law that is easily understandable even outside the context of brand 
protection. The provision in H.R. 683 simply requires that, in order 
for a dilution case to proceed, the plaintiff must show that the 
defendant is using the challenged mark as a mark or name for his own 
company, goods, or services. This formulation is not only consistent 
with the theoretical underpinnings of dilution law--to prevent the use 
of the same mark on different goods or services in ways that would 
whittle away at the distinctiveness of the famous mark or tarnish the 
famous mark's reputation--but also makes it clear that referential and 
other types of uses of famous marks, even if offensive or annoying, do 
not ``dilute'' the mark, though they may give rise to other causes of 
action (such as infringement, false advertising or unfair competition). 
Again, this supports the notion that dilution is meant to be a special 
remedy for only a narrow class of famous marks, and against only a 
narrow class of uses that are likely to impair the distinctiveness or 
harm the reputation of the famous mark, thereby decreasing the power of 
the brand.
    A requirement of defendant's use as a designation of source will 
protect descriptive fair uses \43\ and nominative fair uses \44\ 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 (e.g., a parody of a famous 
trademark in a magazine \45\ or song \46\). Uses of trademarks as a 
designation of source for a defendant's own goods or services in 
salacious or other tarnishing contexts, however, could be enjoined.
---------------------------------------------------------------------------
    \43\ 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. E.g., Cosmetically Sealed Indus., Inc. v. 
Chesebrough-Pond's USA Co., 125 F.3d 38 (2d Cir. 1997) (phrase ``seal 
it with a kiss!!'' used in lipstick advertising was a fair use 
notwithstanding plaintiff's registered mark SEALED WITH A KISS for lip 
gloss); Citrus Group, Inc. v. Cadbury Bevs., Inc., 781 F. Supp. 386 (D. 
MD. 1991) (advertisement using phrase ``your main squeeze'' for soft 
drinks was fair use notwithstanding plaintiff's registered mark MAIN 
SQUEEZE for fruit juice drinks); Wonder Labs, Inc. v. Procter & Gamble 
Co., 728 F. Supp. 1058, 1062-64 (S.D.N.Y. 1990) (phrase ``Dentists' 
Choice'' in toothpaste advertising is a fair use notwithstanding 
plaintiff's trademark DENTIST'S CHOICE for toothbrushes).
    \44\ 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).
    \45\ L.L. Bean, Inc. v. Drake Publishers, Inc., 811 F.2d 26 (1st 
Cir. 1987).
    \46\ Mattel , Inc. v. MCA Records, Inc., 28 F. Supp. 2d 1120 (C.D. 
Cal. 1998), aff'd 296 F.3d 894, 905 (9th Cir. 2002).
---------------------------------------------------------------------------
    Some have questioned whether the ``designation of source'' 
requirement narrows protection against dilution too much or imposes too 
great a burden of proof on plaintiffs. While INTA certainly supports 
ample protection for famous trademarks and a cause of action that is 
reasonably provable, we do not feel that the ``designation of source'' 
requirement significantly impedes protection or proof.

          On the first point, the vast majority of cases that 
        are removed from coverage by the ``designation of source'' 
        requirement, would not be winnable in any event because the 
        vast majority of uses that are not as a ``designation of 
        source'' would be defensible as nominative or descriptive fair 
        uses,\47\ defensible parodies,\48\ defensible non-commercial 
        uses,\49\ or otherwise defensible free speech.\50\ To the 
        extent that the ``designation of source'' requirement creates 
        difficulties in proving a cybersquatting case, the plaintiff 
        has a clear remedy under the Anticybersquatting Consumer 
        Protection Act of 1999.
---------------------------------------------------------------------------
    \47\ E.g., Cosmetically Sealed Indus., Inc. v. Chesebrough-Pond's 
USA Co., 125 F.3d 38 (2d Cir. 1997) (descriptive fair use) and New Kids 
on the Block v. News Am. Publ'g, Inc., 971 F.2d 302 (9th Cir. 1992) 
(nominative fair use).
    \48\ The clear humor in the defendants' portrayals of famous marks 
in the following cases exempted the defendants from dilution liability: 
Tommy Hilfiger Licensing, Inc. v. Nature Labs, LLC, 221 F. Supp. 2d 410 
(S.D.N.Y. 2002) (line of dog perfumes poked fun at famous maker 
perfumes); World Wrestling Fed'n Entm't, Inc. v. Dog Holdings, Inc., 
280 F. Supp. 2d 413 (W.D. Penn. 2003) (merchandise poked fun at WWE 
stars); Lyons P'ship, L.P. v. Giannoulas, 14 F. Supp. 2d 947 (N.D. Tx. 
1998) (sporting event entertainer poked fun at fake Barney the dinosaur 
character in skits with a Big Chicken character); and Lucasfilm Ltd. v. 
Media Market Group, Ltd., 182 F. Supp. 2d 897 (N.D. Cal. 2002) 
(pornographic movie mocked Star Wars films and message of good versus 
evil).
---------------------------------------------------------------------------
  The clear social commentary in the defendants' portrayals of famous 
marks in the following cases exempted the defendants from dilution 
liability: Mattel, Inc. v. Walking Mountain Prod., 353 F.3d 792 (9th 
Cir. 2003) (artist's photographs depicting Barbie dolls being attacked 
by vintage kitchen appliances were social commentary on the Barbie 
image of beauty); Mattel, Inc. v. MCA Records, Inc., 28 F. Supp. 2d 
1120 (1998) (song mocking the Barbie doll image and the plastic values 
she purportedly represented); and Dr. Seuss Enter. L.P. v. Penguin Book 
USA, Inc., 924 F. Supp. 1559 (S.D. Cal. 1996) (rhyming style of Dr. 
Seuss books used to convey author's criticism of the murder trial of 
O.J. Simpson).
---------------------------------------------------------------------------
    \49\ See, e.g., Mattel, Inc. v. MCA Records, Inc., 28 F. Supp. 2d 
1120 (C.D. Cal. 1998), aff'd 296 F.3d 894, 905 (9th Cir. 2002); Charles 
Atlas, Ltd. v. DC Comics, 112 F. Supp. 2d 330 (S.D.N.Y. 2000).
    \50\ E.g. Am. Family Life Ins. Co. v. Hagan, 266 F. Supp. 2d 682 
(N.D. Ohio 2002) (involving political speech).

          On the second point, we do not think making 
        ``designation of source'' part of the plaintiff's prima facie 
        case inappropriately increases the burden on the plaintiff. 
        Again, in the vast majority of cases, proving that the 
        defendant is using as a designation of source will be easy, a 
        simple matter of assertion. As noted above, ``designation of 
        source'' is a well-understood term of art in trademark 
        jurisprudence, and moreover is clear on its face--it's a 
        trademark, service mark, name, logo or other device used to 
        indicate the source of goods or services. In those rare cases 
        where the use itself is ambiguous, the burden on the plaintiff 
---------------------------------------------------------------------------
        will be a bit higher, but not inappropriately so.

    In sum, the ``designation of source'' requirement will ensure that 
dilution protection is clear and focused on dilution harm, and is 
appropriately balanced against First Amendment considerations. INTA 
therefore supports its inclusion in a revised dilution statute.

D. Relief and Preemption
            1. Relief
    H.R. 683 would continue to rely on an injunction as the principal 
form of relief in a federal dilution claim. The bill would also allow 
for the plaintiff to 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. One change from the existing statute is that 
the bill does 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.
    Another, perhaps more noteworthy change from the existing statute, 
is that H.R. 683 expressly addresses the question of retroactive 
application of the law. Because the FTDA is silent on the issue of 
retroactivity, and legislative history does not address whether the 
statute is retroactive in nature, there is presently a divided opinion 
on whether the statute should be applied retroactively to acts 
commenced prior to its January 16, 1996 enactment.\51\ H.R. 683 
corrects this oversight. The bill provides that only injunctive relief 
is available to the owner of a famous mark where a person has adopted 
and used a designation of source in commerce prior to the date of 
enactment of the bill.
---------------------------------------------------------------------------
    \51\  See, e.g., Viacom, Inc. v. Ingram Enterprises, Inc., 141 F.3d 
886 (8th Cir. 1998) (holding that that the FTDA can be applied to 
continuous, ongoing conduct that began before the enactment of the 
FTDA); Circuit City v. Stores, Inc. v. OfficeMax, Inc., 949 F. Supp. 
409 (E.D.Va. 1996) (holding that the FTDA should not be applied 
retroactively because it would upset ``settled expectations'' and the 
vested property interests of the defendants).
---------------------------------------------------------------------------
    INTA agrees with this approach. Conduct arising before the 
enactment of H.R. 683 should not be penalized with compensatory 
damages, which are available under the bill where the court finds that 
the dilution was ``willful,'' because damages are ``quintessentially 
backward looking.'' \52\ Injunctive relief, however, is a prospective 
remedy, and a plaintiff seeking such relief can look to the defendant's 
ongoing conduct in order to determine whether an injunction is 
appropriate.\53\ We do stress our belief that a finding of prospective 
relief should still be contingent upon fairness and equity.
---------------------------------------------------------------------------
    \52\ Landgraff v. USI Film Products, 114 S. Ct. 1483, 1506 (1994); 
see, also, Casa Editrice Bonechi S.R.L. v. Irving Weisdorf & Co., 46 
U.S.P.Q.2d 1725, 1726-27 (S.D.N.Y. 1998) (citing Landgraff)
    \53\ See, Viacom, Inc. v. Ingram Enterprises, Inc., 141 F.3d 886 
(8th Cir. 1998); see, also, Fuente Cigar, Ltd. v. Opus One, 985 F. 
Supp. 1448 (M.D. Fla. 1997) (allowing anti-dilution claim against 
conduct occurring before the FTDA enactment, because awarding 
prospective relief does not constitute retroactive application).
---------------------------------------------------------------------------
            2. Preemption
    INTA believes that a federal dilution statute should not preempt 
state dilution laws because preemption would adversely affect the 
availability 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 current law under the FTDA and it would remain 
unchanged by H.R. 683. We agree.

                             V. CONCLUSION

    Thank you, Mr. Chairman, for the opportunity to testify before the 
subcommittee. INTA looks forward to working with you to pass H.R. 683.

    Mr. Smith. Professor Lemley?

  TESTIMONY OF MARK A. LEMLEY, WILLIAM H. NEUKOM PROFESSOR OF 
                    LAW, STANFORD UNIVERSITY

    Mr. Lemley. Mr. Chairman, thank you. My written remarks are 
in the record. I am not going to repeat them.
    The important things I want to make clear are, first, that 
dilution is, in fact, a problem. It is not a pervasive problem 
for all trademark owners, but if you are an owner of a famous 
mark, you have a rather serious problem, and in my testimony, 
to give just one example, I have attached some of the problems 
that eBay faces, a list of 186 different something-bay-dot-coms 
providing some variant of specialized auction services in 
circumstances that probably aren't confusing to consumers, but 
certainly dilute the significance, the uniqueness of the eBay 
mark.
    There is also, though, a problem with abuses, as 
Representative Berman points out, the abuse by trademark owners 
both seeking to claim the protection of the dilution statute 
when they are not, in fact, actually the owners of famous 
marks, and the potential abuse, actual abuse in several cases, 
by trademark owners seeking to suppress commentary, criticism, 
or parody under the guise of free speech.
    So the goal here, I think, has got to be to strike a 
balance between the interests of trademark owners and the 
interests of consumers, and I think that as a general matter, 
H.R. 683 strikes that balance correctly.
    Two points I want to make. One is the importance of 
changing the actual dilution standard. I think this is 
critical, simply because of the remedial problems. The remedy, 
except in extraordinary cases, under the Federal Trademark 
Dilution Act is limited to injunctions, and the idea that you 
have to wait until you have suffered actual injury, even if you 
can find some way to prove it, and then be limited to an 
injunction against the conduct that has already caused that 
injury, as the court said in Victoria's Secret, essentially 
says you have got to wait until the horse is gone, and then the 
only thing you can do is close the barn door. That makes no 
sense. So I think changing it to likely dilution, which is 
consistent with the trademark law standard of likelihood of 
confusion, makes sense.
    I also want to emphasize, though, on the flip side the 
importance of the limitations that the bill puts in, first 
restricting it to truly famous marks, which I think is an 
important abuse, but even more important, restricting it to 
uses of a trademark in a designation of source. Now, I know Mr. 
Barber is going to talk about this and has a somewhat different 
view, but I want to emphasize the importance of this 
requirement as a protection for legitimate speech.
    We have in the regular trademark law a designation of 
source requirement. It is a requirement sometimes known as 
trademark use. It is well established in the case law. And 
basically, what it says is people can use a trademark for a 
variety of purposes without fear of liability as long as they 
are not, in fact, using it as a brand. They can use the 
trademark in the newspaper. They can use it in comparative 
advertising. They can make fun of it. They can criticize it. 
And this bill would permit all of those uses because it would 
limit the application of dilution to circumstances in which the 
defendant actually uses the brand not to criticize, not to 
comment, not as a fair use as a descriptive use in the Rock and 
Roll Hall of Fame case that Representative Berman mentioned, 
but as a brand specifically designed to trade on the good will 
of the trademark owner.
    Now, the American Intellectual Property Law Association 
offers some objections to this designation of source 
requirement, but with respect, I think they are without merit. 
First, they say it is new, we have never had anything like this 
before, but I think that is just wrong. The trademark law 
already requires what the courts have called trademark use. It 
is phrased in slightly different terms in the statute, use on 
or in connection with goods or services, though that 
phraseology has actually proven a little bit confusing. The 
designation of source requirement, I think, is the right way to 
put it.
    Second, he suggests we might have a problem with cyber 
squatting with domain names, but this body passed a law in 
1999, the Anti-Cyber Squatting Consumer Protection Act, 
designed precisely to deal with that, and that law, coupled 
with an arbitration procedure, the Uniform Dispute Resolution 
Process, has actually dealt very effectively with the problems 
of cyber squatting.
    Tarnishment, which is one of the areas that Mr. Barber 
identifies as a potential problem, I think is actually a tricky 
area in the law. Tarnishment is important to forbid, but 
sometimes trademark owners treat as tarnishment any statement 
about their trademark that they don't like, and I fear that Mr. 
Barber's examples in his testimony, in fact, involve protected 
speech and not trademark infringement. So, for example, if a 
dissatisfied consumer uses the phrase ``Nike-sucks-dot-com'' to 
set up a website in which they complain about Nike, that is a 
use of the trademark. It is a use of the trademark that the 
trademark owner doesn't like, but it is not a tarnishing use 
because you are not branding goods or services that are 
unwholesome with the Nike brand. You are, instead, simply using 
it in a way that the free speech law and the first amendment 
ought to permit.
    So in sum, I think the bill strikes the proper balance, but 
it is important to recognize that that proper balance really is 
a delicate one, that you have got to protect consumers and 
speakers as well as trademark owners.
    Mr. Smith. Thank you, Professor Lemley.
    [The prepared statement of Mr. Lemley follows:]

                  Prepared Statement of Mark A. Lemley

    Trademark dilution--uses of another's mark that blur or otherwise 
interfere with the ability of that mark to identify the source of 
goods--was outlawed by Congress in 1995. Dilution is a real, if not 
pervasive, problem. The owners of some famous trademarks must contend 
with a host of uses that may not confuse consumers, but that draw on 
consumer recognition of the famous mark in a way that makes it more 
difficult over time for consumers to associate the mark with a 
consistent brand image, ultimately raising consumer search costs. To 
take just one example, eBay, the well-known provider of online 
auctions, is faced with hundreds of companies and Web sites that use 
[__Bay.com] to draw attention to their (often auction-related) 
services. Appendix 1* lists 186 such sites, ranging from 
``umbrellaBay.com'' and ``bargainBay.com'' to ``blingBay.com'' and 
``OilBay.'' This multitude of __Bay.com uses blurs the uniqueness of 
the eBay mark. Of particular note are companies that use the __Bay.com 
style for goods or services that consumers might consider offensive, 
such as ``nazibay.com'' (which sells Nazi memorabilia) and ``xbay.com'' 
(which offers pornographic videos). Appendix 2* attaches screen shots 
from several of these Web sites. Traditional trademark law will not 
prevent these uses unless consumers are confused--i.e. they actually 
believe eBay has provided or sponsored these sites. But even in the 
absence of such confusion, eBay's brand image may be irretrievably 
harmed, either because the connection between __Bay.com and the company 
is blurred in the minds of consumers who see these different sites, or 
because particular sites offend consumers who then associate the 
offensive material in their minds with the eBay brand.
---------------------------------------------------------------------------
    *Appendix 1 and Appendix 2 are not re-printed in this hearing but 
are on file at the Subcommittee on Courts, the Internet, and 
Intellectual Property.
---------------------------------------------------------------------------
    The Federal Trademark Dilution Act of 1995 (FTDA) was designed to 
deal with these problems by providing a limited number of famous marks 
with protection not only against confusing uses, but also against non-
confusing uses that affected consumer perceptions of their brands. 
After the passage of that law, however, overzealous trademark owners 
sought to expand it beyond its bounds. Some argued that even run-of-
the-mill marks were sufficiently famous to qualify for trademark 
protection, persuading courts that such marks as Intermatic, TeleTech, 
Nailtiques and WaWa were sufficiently famous to be entitled to 
protection. Others applied the statute to marks that were famous only 
to a narrow ``niche'' of consumers, even if they were unknown to the 
world at large. Still others sought to apply the law to prohibit 
parody, criticism, and other legitimate uses of their marks by third 
parties, including political advertisements for candidates that used 
trademarks to make a point, Web sites that criticized a company with 
which a consumer had had a bad experience, and social commentary making 
fun of familiar consumer icons such as the Barbie doll.
    Perhaps in response to these excesses, courts in several cases 
interpreted the statute so narrowly as to effectively foreclose any 
protection against dilution. Most important in this regard is the 
Supreme Court's 2003 decision in V Secret Catalog v. Moseley, which 
interpreted the FTDA to apply only to cases in which the famous mark 
had actually been blurred. The V Secret decision also suggested that 
dilution by tarnishing the reputation of a mark might not be actionable 
under the FTDA at all, even though it has long been recognized as one 
of the two rationales for dilution. And the Second Circuit has held 
that the FTDA requires proof of inherent rather than acquired 
distinctiveness, meaning that descriptive marks like ``McDonald's'' 
could never be entitled to protection against dilution, regardless of 
how famous they became.
    Proof of actual harm turned out to be virtually impossible to 
obtain, even in cases in which the blurring effect seemed clear. For 
example, in Google v. Googlegear, the district court refused to find 
actual dilution of the famous Google mark by a company that used the 
``Google'' mark to sell its own computing products, even though Google 
showed that Googlegear attracted most of its consumers to its site by 
using the Google mark, and that consumers who had a bad experience on 
that site blamed Google for that experience. Many other courts have 
rejected dilution claims out of hand in the wake of V Secret.
    Neither the expansive reading proposed by trademark owners nor the 
restrictive reading ultimately adopted by the courts properly balances 
the competing interests of trademark owners, commentators, and 
consumers. Dilution is a real problem, one that should be addressed by 
Congress. At the same time, abuse of the law by trademark owners is 
also a real problem, one that can do serious damage to freedom of 
speech, to legitimate competition, and ultimately to consumers 
themselves.
    H.R. 683 strikes the proper balance, limiting trademark dilution to 
truly famous marks and to truly diluting uses without setting an 
impossible burden of proof. In particular, four changes in the existing 
legal rules are worth highlighting:

          HR 683 returns the law to the pre-V Secret standard 
        of a likelihood of dilution. Given that dilution is a hard 
        problem to quantify, and that the primary relief the bill 
        provides is injunctive, this standard makes sense. Requiring 
        actual dilution, as the law now does, not only creates problems 
        of proof but prevents the courts from effectively remedying 
        dilution once it has occurred.

          HR 683 protects not only those famous marks that are 
        inherently distinctive, but those that have acquired 
        distinctiveness as well, provided they are now sufficiently 
        famous. While the normal mark entitled to dilution protection 
        will be unique, and therefore likely arbitrary or fanciful, 
        there are certain descriptive marks (like ``McDonald's'') that 
        are sufficiently famous as to be deserving of protection.

          HR 683 strengthens the requirement of fame. By making 
        it clear that the mark must be ``widely recognized by the 
        general consuming public of the United States,'' the bill 
        rejects the application of the law to so-called ``niche'' fame 
        among a few people or in a small part of the United States. 
        This will help to curb the abuses of the FTDA that occurred in 
        the 1990s by the owners of non-famous trademarks.

          HR 683 expressly adopts the requirement that the 
        defendant use a mark as a ``designation of source.'' This is a 
        familiar requirement from traditional trademark law, where it 
        is sometimes called the ``trademark use'' requirement. Adding 
        it to the dilution statute provides an important safeguard 
        against the use of the law to attack free speech or legitimate 
        competition. Competitors, parodists, disgruntled consumers, the 
        media and others will be free to use even famous trademarks to 
        comment, criticize, discuss or make fun of the trademark owner, 
        and to engage in legitimate comparisons between their products 
        and the trademark owner's. Similarly, everyone will be able to 
        use a trademark that also has a dictionary meaning (such as 
        ``visa'') in its dictionary rather than its trademark sense. 
        None of these uses seek to appropriate the famous mark as a 
        brand for the defendant's own products. Only where the 
        defendant uses the famous mark as a mark--as a means of 
        identifying their own goods--are the risks of dilution present.

    These changes address both the excesses of trademark owners and the 
overreaction of the courts. In my view, they properly strike the 
balance between over- and underprotection in this important area of 
law.
    In evaluating HR 683, and in particular its impact on First 
Amendment rights, it is important to keep in mind a number of 
provisions of the FTDA it does not change. The FTDA already exempts 
comparative advertising, noncommercial use, news reporting and 
commentary from its ambit, and HR 683 would maintain those exemptions. 
The legislative history of the FTDA made it clear that the meaning of 
``commercial use'' was established by long-standing caselaw 
interpreting the ``commercial speech'' doctrine in the First Amendment. 
Under these principles, only speech that proposes a commercial 
transaction, not any speech that may ultimately generate revenue, is 
commercial speech to which the dilution statute applies. Congress 
should reaffirm that history in reenacting identical language in HR 
683. Further, existing defenses to trademark infringement, such as the 
doctrines of fair use and noncommercial use, presumably remain 
available to defendants under the new bill to the same extent they did 
under the FTDA. Again, legislative history making it clear that HR 683 
does not eliminate or override those defenses would be useful in 
restraining aggressive interpretations of the statutory language and in 
preserving the important freedoms of speech, parody, criticism and 
commentary.

    Mr. Smith. Mr. Barber?

    TESTIMONY OF WILLIAM G. BARBER, PARTNER, FULBRIGHT AND 
JAWORSKI, LLP, ON BEHALF OF THE AMERICAN INTELLECTUAL PROPERTY 
                        LAW ASSOCIATION

    Mr. Barber. Mr. Chairman, Mr. Berman, and Members of the IP 
Subcommittee, the AIPLA agrees that the dilution statute should 
be amended and supports many aspects of H.R. 683. To stay 
within my allotted time today, I would like to focus on the 
main areas where we think the bill should be modified.
    AIPLA hosted a meeting a few weeks ago with INTA and other 
major IP organizations to discuss this bill, and although we 
reached consensus on a number of aspects, we were unable to 
come to agreement on two key issues. The first I would put in 
the category of, ``If it ain't broke, don't fix it,'' and the 
other one is in the opposite category of something that is 
broken and does need to be fixed.
    One aspect of the current statute that we think has worked 
very well is how courts have accommodated first amendment and 
fair use principles. When the dilution statute was enacted in 
1995, Congress inserted certain safeguards to protect 
legitimate free speech interests, first, by explicitly 
proscribing only commercial uses of another's mark, and second, 
by setting forth three exclusions covering comparative 
advertising, non-commercial use, and all forms of news 
reporting and news commentary. In addition, courts have had no 
trouble applying traditional defenses to dilution claims, such 
as nominative and descriptive fair use.
    Despite these safeguards, H.R. 683 would add a new 
provision limiting dilution protection to situations where a 
person is using the allegedly diluting term, quote, ``as a 
designation of source of that person's goods or services.'' 
This would be a completely new requirement in dilution 
jurisprudence. None of the dilution statutes in this country, 
going all the way back to the 1940's, have ever included this 
limitation, and the potential consequences could be devastating 
for trademark owners. It would leave gaping holes in the 
statute's coverage, precluding dilution claims against several 
types of damaging uses that have traditionally been actionable.
    First, many highly tarnishing uses of a famous mark would 
be excluded. Examples of such uses are legion in the case law: 
Posters saying ``Enjoy Cocaine'' in Coca-Cola's famous script 
logo; obscene depictions of the Pillsbury Dough Boy doing 
sexual acts in a magazine. This limitation will remove 
trademark owners' most potent weapon to combat these types of 
abuses of their famous marks.
    Second, use of a famous mark in a domain name would no 
longer be actionable as dilution unless the defendant is also 
using the mark to designate its own goods or services sold on 
the website, and yes, we do have a cyber squatting statute, but 
that requires a showing of bad faith. In many instances, there 
is no bad faith but there still is dilution in these domain 
name cases.
    Third, misuses of a famous mark as a generic term, even by 
a competitor in commercial advertising, would no longer be 
actionable. As a result, trademark owners may be rendered 
powerless to prevent their marks from falling into the public 
domain. We recognize that such cases can raise first amendment 
and fair use issues, but those issues are more appropriately 
analyzed in the context of defenses. We believe it is 
inappropriate to categorically exempt all of these types of 
damaging uses from dilution protection. This limitation should 
be removed from H.R. 683 and modifications made to the 
``defenses'' section to address first amendment issues as 
necessary.
    Turning to our second major concern, we believe this is a 
great opportunity to fix a problem that has plagued dilution 
statutes for decades. The problem is a subtle but real one, the 
use of the term ``distinctive'' or ``distinctiveness'' in the 
dilution statutes. The term ``distinctive'' is a well-
established term in trademark law that simply doesn't fit 
dilution well. In trademark law, distinctiveness means the 
minimum source identifying capability that any mark must have 
to be protectable.
    Since all protectable marks are distinctive, defining 
dilution by blurring as impairment of distinctiveness or 
distinctive quality gives courts virtually no guidance on what 
marks qualify for blurring protection and when they are 
blurred. This has led to significant confusion and even 
hostility in the courts toward the dilution doctrine.
    Dilution by blurring is intended to protect marks that are 
not merely distinctive, but rather unique marks, like Kodak or 
Dupont. If someone opens a dry-cleaning business named ``Kodak 
Cleaners,'' it impairs the mark's uniqueness, not its 
distinctiveness in the traditional sense, that is, its inherent 
or acquired distinctiveness.
    Accordingly, we believe the impairment of distinctiveness 
standard should be removed from H.R. 683 and that dilution by 
blurring should be defined as impairment of consumers' 
association between the famous mark and a single source. That 
is the essence of dilution--the essence of blurring, excuse me.
    We also believe it would be helpful to provide the list of 
factors suggested in our written statement to guide courts in 
determining whether this unique association is impaired in a 
particular case. This language represents a reasonable 
compromise between the proposals originally made by INTA and 
AIPLA on how to define dilution by blurring and would 
significantly improve dilution jurisprudence. Thank you.
    Mr. Smith. Thank you, Mr. Barber.
    [The prepared statement of Mr. Barber follows:]

                Prepared Statement of William G. Barber

    Mr. Chairman:
    I am pleased to have the opportunity to present the views of the 
American Intellectual Property Law Association (AIPLA) on the proposals 
to amend the federal trademark dilution act,\1\ and specifically the 
bill entitled the ``Trademark Dilution Revision Act of 2005'' 
(H.R.683).
---------------------------------------------------------------------------
    \1\ See Lanham Act Section 43(c), 15 U.S.C. Sec. 1125(c) 
(``FTDA'').
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    AIPLA is a national bar association of more than 16,000 members 
engaged in private and corporate practice, in government service, and 
in the academic community. AIPLA represents a wide and diverse spectrum 
of individuals, companies and institutions involved directly or 
indirectly in the practice of patent, trademark, and copyright law, as 
well as other fields of law affecting intellectual property.

                                SUMMARY

    Sec. 2(1) of H.R. 683 would replace current Lanham Act Section 
43(c) with a substantially revised version. The AIPLA agrees that 
Section 43(c) is in need of amendment and strongly supports H.R. 683, 
with two primary exceptions: first, the proposed restriction in Section 
43(c)(1) to limit relief only to situations where a person uses the 
diluting mark ``as a designation of source of the person's goods or 
services'' is both unnecessary and inappropriate, and should be 
omitted; and second, the definition and factors for determining 
``dilution by blurring'' in Section 43(c)(2)(B) should be modified to 
properly focus on impairment of consumers' association between the 
famous mark and a single source, as opposed to the mark's 
``distinctiveness.'' We also suggest amending the defenses section, 
Section 43(c)(3), to more clearly accommodate First Amendment concerns.

                               BACKGROUND

    AIPLA has long taken a leading role in efforts to improve this 
country's intellectual property laws, including the law of trademarks. 
Indeed, this is the third time in the past few years that AIPLA has 
testified or submitted comments to this Subcommittee urging changes to 
the federal trademark dilution statute. On February 14, 2002, we 
testified in support of a proposal to modify the dilution statute to 
provide for a ``likelihood of dilution'' standard. (See AIPLA 
testimony, Oversight Hearing on the Federal Trademark Dilution Act, 
February 14, 2002). Last year, on April 20, 2004, AIPLA submitted a 
letter to the Subcommittee addressing various aspects of the Committee 
Print made available for that hearing.

                 KEY IMPROVEMENTS EMBODIED IN H.R. 683

    In our view, Mr. Chairman, H.R. 683 would make a number of key 
improvements to the dilution statute that we strongly endorse. First 
and foremost, as discussed above, it would amend the statute to provide 
relief where the trademark owner can show a ``likelihood of dilution'' 
of its famous mark, thus relieving trademark owners of the unreasonable 
burden--in most cases virtually impossible to satisfy--of proving 
``actual dilution'' as required by the Supreme Court's interpretation 
of the current statute in Moseley v. V Secret Catalogue, Inc., 537 U.S. 
418, 433 (2003). Second, it would clarify that famous marks lacking 
inherent distinctiveness but that have acquired distinctiveness through 
use (e.g., descriptive marks such as NEW YORK STOCK EXCHANGE) are 
potentially protectable against dilution, thus overruling an 
unfortunate line of decisions from the Second Circuit holding that such 
marks are categorically ineligible for dilution protection under the 
FTDA.\2\ Third, it would clarify that dilution by tarnishment is 
actionable under the statute, removing the doubt created on this issue 
by certain dicta in the Supreme Court's Moseley decision.\3\ Finally, 
it would define the term ``famous'' in such a manner that only marks 
that are ``widely recognized by the general consuming public'' would be 
eligible for protection, thus overruling decisions that have accorded 
dilution protection to marks known only in a ``niche'' market.
---------------------------------------------------------------------------
    \2\ See, e.g., New York Stock Exch., Inc. v. New York, New York 
Hotel, LLC, 293 F.3d 550, 556-57 (2d Cir. 2002).
    \3\ 537 U.S. at 432.
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                     PROPOSED AMENDMENTS TO HR. 683

1. The ``Designation of Source'' Requirement Should Be Removed
    As stated in our April 20, 2004 letter, AIPLA opposes any amendment 
to Section 43(c)(1) to add the limitation, ``as a designation of source 
of the person's goods or services.'' We believe this limitation is 
severely overbroad, removing from the statute's ambit several types of 
uses that traditionally have been subject to dilution relief. Moreover, 
we believe it is unnecessary. As we understand it, the proposed 
``designation of source'' limitation was intended to prevent any 
descriptive or nominative fair use of a mark from being actionable, and 
also to respond to concerns that extending dilution protection to 
other, non-trademark uses would raise First Amendment issues. However, 
descriptive fair use and nominative fair use have never been actionable 
under the FTDA. See, e.g., ETW Corp. v. Jireh Publishing, Inc., 332 
F.3d 915, 923 n.7 (6th Cir. 2003) (``purely descriptive'' use of 
``Tiger Woods'' mark on envelope and in narrative text for art print 
was fair use). Furthermore, fair use defenses and First Amendment 
issues would be more appropriately addressed in the defenses section of 
the bill, Section 43(c)(3). Although AIPLA does not believe that the 
courts previously have had any difficulty applying such defenses in 
dilution actions, we believe that an amendment to the defenses section 
(such as that suggested in 3 below) could adequately address any 
concerns other interested parties may have in ensuring that the FTDA is 
not misapplied. Likewise, courts have had no difficulty in reconciling 
the existing statute with protection of First Amendment rights, and 
AIPLA does not believe that a severe limitation on dilution protection 
such as that proposed is needed to enable them to continue doing so in 
appropriate situations.
    If the ``designation of source'' limitation remains in the bill and 
becomes law, three important misuses of a famous mark would no longer 
be actionable: (1) domain name uses that do not fall under the Anti-
Cybersquatting Consumer Protection Act; (2) tarnishing uses that are 
not ``designation[s] of source for the [user's] goods or services''; 
and (3) generic misuses.
            (a) Domain Names
    The Anti-Cybersquatting Consumer Protection Act (``ACPA''), Lanham 
Act Section 43(d), created a cause of action against anyone who, with a 
bad faith intent to profit from the mark, registers, traffics in, or 
uses a domain name that is identical or confusingly similar to a 
distinctive mark, or is identical or confusingly similar to or dilutive 
of a famous mark. See, e.g., Sporty's Farm L.L.C. v. Sportsman's 
Market, Inc., 202 F.3d 489 (2d Cir. 2000). While that Act has proven to 
be a potent weapon against cybersquatters, there remain a substantial 
number of domain name cases where there is no bad faith or it cannot be 
proven, but there is still likelihood of confusion or dilution which 
warrants relief. See, e.g., PACCAR Inc. v. TeleScan Techs., L.L.C., 319 
F.3d 243 (6th Cir. 2003) (confusion likely due to defendant's 
incorporation of plaintiff's trademarks into domain names for 
defendant's websites which provided truck locator services); Harrods 
Ltd. v. Sixty Internet Domain Names, 302 F.3d 214, 227-232 (4th Cir. 
2002) (concluding that a plaintiff in an in rem action under the ACPA 
``may, in appropriate circumstances, pursue infringement and dilution 
claims as well as bad faith registration claims,'' and remanding for 
consideration of the non-bad faith domain names). As Professor McCarthy 
explains in his treatise, Trademarks and Unfair Competition Sec. 25:76 
(4th ed. 2004):

        The federal anti-dilution act can be violated by dilution of a 
        famous mark by either blurring or tarnishment. If a domain name 
        is used for a web site that advertises the sale of goods or 
        services and the domain name tarnishes a famous mark, it can be 
        in violation of the federal anti-dilution act. Such was the 
        case with the domain name ``candyland.com'' for a website 
        showing sexually explicit pictures [Hasbro, Inc. v. Internet 
        Entertainment Group Ltd., 40 U.S.P.Q.2d 1479 (W.D. Wash. 1996) 
        (tarnishing CANDYLAND for children's game)], the domain name 
        ``barbiesplaypen.com'' for an adult entertainment website 
        [Mattel, Inc. v. Internet Dimensions, Inc., 55 U.S.P.Q. 2d 1620 
        (S.D.N.Y. 2000) (tarnishing image of Mattel's BARBIE 
        products)], and the domain name ``adultsrus.com'' used on a 
        site advertising the sale of adult sexual products [Toys ``R'' 
        Us v. Akkaoui, 40 U.S.P.Q. 2d 1836 (N.D. Cal. 1996) (tarnishing 
        Toys ``R'' Us for children's toys)]. Similarly, if a domain 
        name is used for a commercial web site and the domain name 
        causes ``blurring'', a junior user can be enjoined for using 
        the infringing domain name. [TeleTech Customer Care Mgmt. 
        (Cal.), Inc. v. Tele-Tech Co., 977 F.Supp. 1407 (C.D. Cal. 
        1997) (``teletech.com'' for telecommunications engineering and 
        installation services site blurred plaintiff's TELETECH mark 
        for customer care information services)].

See also Savin Corp. v. Savin Group, 2004 U.S. App. LEXIS 25479 at *26 
(2d Cir. 2004) (remanded for consideration of the facts under the 
actual dilution standard as set forth in Moseley; ``[w]here the senior 
and junior `Savin' marks both are used in website addresses, the marks 
may be identical'', which may satisfy that standard); Nissan Motor Co. 
v. Nissan Computer Corp., 378 F.3d 1002 (9th Cir. 2004) (although 
defendant's registration and use of nissan.com, based on his Nissan 
Computer Corp. company name, was not in bad faith, lower court held 
that it diluted plaintiff's rights under FTDA in its NISSAN mark for 
automobiles); Harrods Ltd. v. Sixty Internet Domain Names, supra 
(plaintiff owned rights in ``Harrods'' for department store services in 
the U.K. and defendant owned the rights in Argentina; defendant was 
held liable under the ACPA for bad faith registrations of numerous 
``Harrods''-derivative domain names, but case remanded for 
consideration of six such non-bad faith ``Argentina'' domain names 
under infringement and dilution law); TCPIP Holding Co. v. Haar 
Communs., Inc., 2004 U.S. Dist. LEXIS 13543 (S.D.N.Y. 2004) (summary 
judgment granted; ``[p]laintiff has demonstrated that its mark is 
famous and that Defendant's domain name dilutes its mark by lessening 
its capacity to identify and distinguish Plaintiff's goods and 
services'').
    While in some domain name cases the ACPA will also apply, in others 
the bad faith element may be absent. The requirement that the use be 
``as a designation of source for the person's goods or services'' would 
eliminate FTDA relief for all diluting domain names; omitting this 
limiting language would permit the long-standing coverage of domain 
names under the FTDA to continue.
            (b) Tarnishing Uses
    In addition to precluding courts from granting FTDA relief in 
domain name tarnishment cases where bad faith is absent, the proposed 
``designation of source'' limitation would have the same preclusive 
effect on other tarnishment cases where a defendant's commercial use is 
not as a designation of source for its goods or services. This would 
eliminate an entire body of law in which courts have been granting 
relief for many years.
    As explained by the Second Circuit, ``The sine qua non of 
tarnishment is a finding that plaintiff's mark will suffer negative 
associations through defendant's use.'' Hormel Foods Corp. v. Jim 
Henson Prods., 73 F.3d 497 (2d Cir. 1996) (trademark SPAM not tarnished 
by character name ``Spa'am'' in a Muppets movie). Uses that are 
noncommercial or First Amendment-protected commentary or criticism will 
not create tarnishment liability. See, e.g. TMI, Inc. v. Maxwell, 368 
F.3d 433, 434, 440 (5th Cir. 2004) (holding that ``noncommercial gripe 
site'' criticizing trademark owner did not violate FTDA or Texas 
dilution statute); L.L. Bean, Inc. v. Drake Publishers, Inc., 811 F.2d 
26, 32-33 (1st Cir. 1987) (two page parody entitled ``L.L. Bean's Back-
to-School Sex Catalog'' within adult entertainment magazine constituted 
``an editorial or artistic, rather than a commercial, use of 
plaintiff's mark'' and created no dilution liability). However, where a 
commercial use crosses the line and causes likely damage to plaintiff's 
mark, courts have granted dilution relief. Compare Anheuser-Busch, Inc. 
v. Balducci Pub'ns, 28 F.3d 769, 778 (8th Cir. 1994) (fake 
advertisement on back cover of defendant's humor magazine advertising 
fictitious ``Michelob Oily'' product and suggesting plaintiff's product 
was contaminated with oil violated state dilution law; such use of 
plaintiff's mark ``was not even remotely necessary to [defendant's] 
goals of commenting on the Gasconade oil spill and water pollution 
generally,'' and the placement on the back cover might cause viewers to 
``fail to appreciate [the ad's] editorial purpose''); Dallas Cowboys 
Cheerleaders, Inc. v. Pussycat Cinema, Inc., 604 F.2d 2000 (2d Cir. 
1979) (preliminarily enjoining under dilution law the distribution of 
adult movie featuring porn star wearing a simulation of uniform worn by 
Dallas Cowboys cheerleaders); Coca-Cola Co. v. Gemini Rising, Inc., 346 
F.Supp. 1183, 1189 n.7 (E.D.N.Y. 1972) (enjoining sale of ``Enjoy 
Cocaine'' posters simulating plaintiff's ``Enjoy Coca-Cola'' logo).
    In Deere & Co. v. MTD Products, Inc., 41 F.3d 39 (2d Cir. 1994), a 
competitor of Deere in a TV ad promoting its product was found to have 
deliberately sought to damage consumer associations with Deere's famous 
``Deere Logo.'' It animated the logo and showed it as a tiny fleeing 
deer being terrorized by a little dog and the defendant's Yardman lawn 
tractor. In granting dilution relief, the Second Circuit observed that 
``some alterations have the potential to so lessen the selling power of 
a distinctive mark that they are appropriately proscribed by a dilution 
statute. Dilution of this sort is more likely to be found when the 
alterations are made by a competitor with both an incentive to diminish 
the favorable attributes of the mark and an ample opportunity to 
promote its products in ways that make no significant alteration.'' Id. 
at 45. It noted in particular that MTD was still free to run 
comparative advertisements. ``MTD remains free to deliver its message 
of alleged product superiority without altering and thereby diluting 
Deere's trademarks.'' Id. If the proposed limitation were accepted, it 
would eliminate the ability under the FTDA to stop this type of unfair 
competitive activity, and it would be open season for competitors to 
inflict commercial damage on well-known marks.
            (c) Generic Misuses
    The third type of use for which the proposed ``designation of 
source'' limitation would eliminate relief is generic misuse. A 
valuable trademark can become an unprotectable public domain generic 
term if the trademark owner fails to take action to prevent it. 
Exceptional commercial success can lead to the trademark being used to 
refer to a type of product rather than a brand. Examples where rights 
were lost include aspirin (even though it's still a brand in, e.g., 
Canada and Europe), cellophane, dry ice, escalator, linoleum, 
photostat, spandex, tarmac, yo-yo, and zipper.
    The burden is on the trademark owner to prevent this from 
happening, and the means of doing so range from emphasizing brand 
significance and using educational advertising to stopping those who 
make commercial generic misuse. As explained in Illinois High School 
Ass'n v. GTE Vantage, Inc., 99 F.3d 244, 246 (7th Cir. 1996), ``[a] 
serious trademark owner is assiduous in endeavoring to convince 
[misusers] to avoid using his trademark to denote anything other than 
the trademarked good or service.'' As occurred in E.I. DuPont de Nemous 
& Co. v. Yoshida Int'l, Inc., 393 F.Supp. 502, 507 (E.D.N.Y. 1975), 
those efforts typically include ``extensive surveillance by [the 
owner's] legal and advertising departments,'' with misuses promptly 
responded to. Where the commercial use is sufficiently damaging, legal 
action may prove necessary. See, e.g., Selchow & Righter Co. v. McGraw 
Hill Book Co., 580 F.2d 25, 27 (2d Cir. 1978), where the court granted 
a preliminary injunction ``at least in part'' because defendant's book 
entitled THE COMPLETE SCRABBLE DICTIONARY might render generic 
plaintiff's mark SCRABBLE for a word game.
    There can be no doubt that generic misuse diminishes the 
distinctiveness and impairs the association of a famous mark with a 
single source. Again, noncommercial misuses are not actionable under 
the FTDA, but uses in a commercial context should be. Restatement 
(Third) of Unfair Competition Sec. 25, comment i. Many owners of famous 
trademarks have to fight this battle on a daily basis. Examples of such 
trademarks include Band-Aid, Chapstick, Coke, Dumpster, Formica, 
Frisbee, Google, Jacuzzi, Jeep, Jello, Kleenex, Lego, Plexiglas, 
Popsicle, Q-Tips, Rollerblade, Speedo, Styrofoam, Tabasco, Teflon, 
Tivo, Tylenol, Vaseline, Windex, Xerox, Zamboni, and many others. 
Misuses of such marks obviously are not made to designate the source of 
defendant's product. The proposed ``designation of source'' limitation 
therefore deprives trademark owners of the best and often the only 
legal remedy they have against such commercial misuses.
            (d) Other Problems
    The ``designation of source'' proposal creates other problems as 
well. It would in essence shift the burden on fair use to the 
plaintiff. Traditionally, the defendant asserting a fair use defense 
has the burden to prove that it is not using the challenged term as a 
mark (see Lanham Act Section 33(b)(4)), but this proposal would appear 
to require the plaintiff in a dilution case to prove that defendant is 
using a term as a mark. Moreover, unlike ``trade name'' or ``mark,'' 
the phrase ``designation of source'' is nowhere defined in the bill. 
The inclusion of such an undefined term will only lead to further 
confusion in the statute's application.
    Finally, it would create an illogical anomaly between trademark 
infringement law and trademark dilution law. There is no analogous 
``designation of source'' requirement for establishing trademark 
infringement under the Lanham Act. See, e.g., Sections 32(1) and 43(a). 
Just as a non-trademark use can create a likelihood of confusion (and 
thus constitute trademark infringement), it can likewise create a 
likelihood of dilution. Either way, the trademark owner is damaged and 
should be provided relief.

2. The Definition and Factors for ``Dilution by Blurring'' Should Be 
        Modified
    To put into proper context AIPLA's concerns regarding the 
definition and factors for determining ``dilution by blurring'' 
contained in H.R. 683, it is important to first review the historical 
underpinnings of the doctrine and understand what dilution by blurring 
is really all about.
    The genesis of the dilution doctrine in this country is commonly 
traced back to an article by Professor Frank I. Schechter entitled, 
``The Rational Basis for Trademark Protection,'' 40 Harv. L. Rev. 813 
(1927). Professor Schechter observed that the selling power of a mark 
depends largely on its ``uniqueness and singularity,'' \4\ and 
therefore ``the preservation of the uniqueness or individuality of the 
trademark is of paramount importance to its owner.'' \5\ Marks that are 
``actually unique and different from other marks'' \6\ should be given 
a broader degree of protection, Professor Schechter argued, because 
they would ``gradually but surely lose [their] effectiveness'' if 
others were to use such marks in connection with different classes of 
goods or services.\7\ He concluded that ``the preservation of the 
uniqueness of a trademark should constitute the only rational basis for 
its protection.'' \8\
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    \4\ 40 Harv. L. Rev. at 831.
    \5\ Id. at 822.
    \6\ Id. at 831.
    \7\ Id. at 830.
    \8\ Id. at 831.
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    Professor Schechter offered several examples of marks appropriate 
for this type of protection, including ROLLS-ROYCE, AUNT JEMIMA'S, 
KODAK, and RITZ-CARLTON.\9\ Similarly, the legislative history of the 
FTDA provides the following classic examples of diluting marks: DUPONT 
shoes, BUICK aspirin, and KODAK pianos.\10\ Other examples cited in the 
case law include SCHLITZ varnish, BULOVA gowns, TYLENOL snowboards, 
NETSCAPE sex shops, and HARRY POTTER dry cleaners.\11\ These examples 
well illustrate the types of marks appropriate for protection against 
dilution by blurring--they are all not only famous but also 
substantially unique. The vast majority of the consuming public no 
doubt associates each of these marks with one source and only one 
source. It follows, then, that permitting others to use such marks in 
connection with other products or services would blur the association 
in the public mind between the famous mark and its original source. 
This is the essence of dilution by blurring.
---------------------------------------------------------------------------
    \9\ Id.
    \10\ H.R. Rep. No. 104-374 at 3 (1995), reprinted in 1995 
U.S.C.C.A.N. 1029, 1030.
    \11\ See, e.g., Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894, 
903 (9th Cir. 2002); Eli Lilly & Co. v. Natural Answers, Inc., 230 F.3d 
456, 466 n.4 (7th Cir. 2000); Sally Gee, Inc. v. Myra Hogan, Inc., 699 
F.2d 621 (2d Cir. 1983).
---------------------------------------------------------------------------
    Section 43(c)(2)(B) in H.R. 683 defines ``dilution by blurring'' as 
``association arising from the similarity between a designation of 
source and a famous mark that impairs the distinctiveness of the famous 
mark.'' The primary problem with this definition is its use of the term 
``distinctiveness.'' ``Distinctiveness'' is a well-established term of 
art in trademark law,\12\ denoting the minimal source-identifying 
capability necessary for protection of a mark. By definition, all 
protectable marks are ``distinctive,'' either through ``inherent 
distinctiveness'' or ``acquired distinctiveness.''\13\ This creates a 
confusing ambiguity in the statute: does ``distinctiveness'' as used in 
the definition of dilution by blurring mean this traditional 
distinctiveness, or does it mean something else?
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    \12\ Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208, 215 (2d Cir. 
1999).
    \13\ Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769 
(1992).
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    If ``distinctiveness'' is intended to have its traditional 
trademark term of art meaning, then ``impairment of distinctiveness'' 
is a very poor definition for dilution by blurring. First, since all 
protectable marks have the minimal required level of distinctiveness, 
the definition gives courts virtually no guidance on which marks 
qualify for protection and which do not, and when they are
    diluted. Second, ``distinctiveness'' is simply the wrong term to 
use in this context, because diluting uses do not impair 
distinctiveness in the traditional sense. For example, the mark KODAK 
is a coined term and thus possesses the maximum degree of inherent 
distinctiveness on the traditional distinctiveness scale.\14\ If 
someone were to use KODAK for pianos, the original KODAK mark would be 
no less coined, even though it would clearly be diluted. Similarly, the 
mark NEW YORK STOCK EXCHANGE is descriptive but has acquired a 
tremendous amount of distinctiveness through long use and renown. If 
someone were to use NEW YORK STOCK EXCHANGE in connection with a 
casino, the mark would be no less well known for stock exchange 
services. What is impaired by these uses is the famous mark's 
uniqueness, not distinctiveness.
---------------------------------------------------------------------------
    \14\ Trademark law has traditionally categorized marks on a 
spectrum of distinctiveness that ranges from most distinctive to least 
distinctive as follows: (1) coined, fanciful, or arbitrary; (2) 
suggestive; (3) descriptive; and (4) generic. See, e.g., Abercrombie & 
Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 (2d Cir. 1976). Marks 
in the first two categories are considered inherently distinctive, 
while descriptive marks must acquire distinctiveness before being 
protected.
---------------------------------------------------------------------------
    Use of the term ``distinctiveness'' in the definition is not only 
technically incorrect, it can lead to improper results. While 
essentially all famous marks are distinctive, they are not all unique. 
Consider as an example the famous computer mark APPLE. That mark is 
arbitrary in relation to computers, and thus ranks very high on the 
distinctiveness scale. However, it is not unique. There are also APPLE 
records, APPLE banks, APPLE leasing services, and many other businesses 
named APPLE. Therefore, permitting someone to open a new APPLE dry 
cleaners would not likely dilute the computer manufacturer's mark. But 
if a court were to try to apply the ``impairment of distinctiveness'' 
definition in H.R. 683 literally, it might be led to the opposite 
result due to the APPLE mark's high degree of inherent distinctiveness.
    Unfortunately, use of this term of art in dilution statutes is not 
a new problem. It is a vestige of history that has been plaguing 
dilution law for decades. The early state dilution statutes,
    which were typically modeled after the 1964 Model State Trademark 
Bill, spoke in terms of ``dilution of the distinctive quality'' of a 
mark. Use of this same phrase was then carried forward into the current 
version of the FTDA enacted in 1995, Lanham Act Section 43(c)(1). This 
language has long befuddled courts and created significant concerns 
about the dilution doctrine in general. See, e.g., Ringling Bros.-
Barnum & Bailey Combined Shows, Inc. v. Utah Div. of Travel Dev., 170 
F.3d 449, 455 (4th Cir. 1999) (acknowledging ``the sheer difficulty 
that courts have had in getting a firm handle on the basic concept of 
`dilution' as cryptically expressed in the typical state statute in an 
elaborated reference to `dilution of the distinctive quality of a mark' 
''); Jordache Enters., Inc. v. Hogg Wyld, Ltd., 828 F.2d 1482, 1498 
(10th Cir. 1987) (``It has been widely observed that many courts have 
been hostile to state antidilution statutes.'') As noted in the 
Restatement (Third) of Unfair Competition:

        At first the courts applied the statutes reluctantly, if at 
        all. . . . Some courts, and numerous commentators expressed 
        fear that the uncertain limits of action would unduly expand 
        the ability of trademark owners to monopolize language and 
        inhibit free speech.\15\
---------------------------------------------------------------------------
    \15\ Restatement (Third) of Unfair Competition Sec. 25 cmt. b 
(1995).

    The struggle to properly understand and apply dilution statutes 
continues today. In a recent article, Professor McCarthy (perhaps the 
leading commentator in the trademark field) stated, ``No part of 
trademark law that I have encountered in my forty years of teaching and 
practicing IP law has created as much doctrinal puzzlement and judicial 
incomprehension as the concept of `dilution' as a form of intrusion on 
a trademark. It is a daunting pedagogical challenge to explain even the 
basic theoretical concept of dilution to students, attorneys, and 
judges.'' J. Thomas McCarthy, ``Proving a Trademark Has Been Diluted: 
Theories or Facts?,'' 41 Houston L. Rev. 713, 726 (2004).
    Rather than remedy the long standing confusion stemming from use of 
the term ``distinctive quality'' in the dilution statutes to date, H.R. 
683, if anything, exacerbates the problem, changing the term to merely 
``distinctiveness.'' AIPLA submits that it is time to remove the 
trademark term of art ``distinctive(ness)'' from the statutory 
definition and provide courts with much needed guidance on determining 
``dilution by blurring.'' \16\
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    \16\ Accord, David J. Kera and Theodore H. Davis, Jr., ``The Fifty 
Fifth Year of Administration of the Lanham Act of 1946,'' 93 Trademark 
Rep. 197, 202 (1993). Describing the ``Distinctiveness Conundrum,'' the 
authors state that ``different terminology should be used to separate 
the type of `distinctiveness' needed to acquire trademark protection 
from . . . the type of `distinctiveness' needed to obtain protection 
under dilution law. The term `distinctiveness' should be reserved to 
describe only the threshold over which a symbol must pass to gain 
trademark protection. . . . The terms `singularity' and `uniqueness' 
should be employed to describe the threshold over which a mark must 
pass to be entitled to protection under dilution law. . . .''
---------------------------------------------------------------------------
    AIPLA's original proposal to accomplish this goal was to define 
``dilution by blurring'' as ``impairment of the public's association of 
a famous and substantially unique mark exclusively with a single 
source.'' We believe this definition embodied two key improvements over 
the current language: (1) it made clear that only ``substantially 
unique'' marks are eligible for protection; and (2) it defined the harm 
in terms of impairment of association between the famous mark and a 
single source, rather than the mark's ``distinctiveness.''
    Earlier this year, AIPLA hosted a meeting with other interested 
intellectual property law associations to discuss the differences among 
us on this and other aspects of the bill. In these discussions, 
concerns were raised as to whether courts would understand and properly 
apply the term ``substantially unique.'' \17\ Although AIPLA does not 
share those concerns, we suggested the following definition and factors 
as one possible way of bridging our differences:
---------------------------------------------------------------------------
    \17\ AIPLA's proposal defined ``substantially unique mark'' as ``a 
mark associated substantially exclusively with a single source. The 
extent of third party use may be considered in determining whether the 
mark is associated substantially exclusively with a single source; de 
minimis use of the mark will not preclude protection with regard to 
dilution by blurring.''

          (B)For purposes of paragraph (1), `dilution by blurring' 
        means impairment of the association between the famous mark and 
        a single source. In determining whether use of a mark or trade 
        name is likely to cause dilution by blurring, the court may 
        consider all relevant factors, including but not limited to the 
---------------------------------------------------------------------------
        following:

               (i) The strength of the association between the famous 
        mark and a single source.

               (ii) The degree of recognition of the famous mark.

               (iii) The degree of inherent or acquired distinctiveness 
        of the famous mark.

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

               (v) The degree of similarity between the mark or trade 
        name and the famous mark.

               (vi) Whether the user of the mark or trade name intended 
        to impair the association between the famous mark and a single 
        source.

               (vii) Any actual impairment of the association between 
        the famous mark and a single source.

    We believe this suggestion also properly focuses courts on the 
impairment of consumers' association between the famous mark and a 
single source (as opposed to the mark's ``distinctiveness''), and 
provides a list of appropriate factors relevant to determine the 
likelihood of dilution by blurring.\18\
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    \18\ Over the years, courts around the country have struggled to 
develop lists of factors to determine dilution. These judicial lists 
often conflict and include factors more relevant to infringement 
analysis (likelihood of confusion) than the separate harm of dilution. 
Compare, e.g., Toro Co. v. ToroHead, Inc., 61 U.S.P.Q.2d 1164, 1183 
(TTAB 2001); Eli Lilly & Co. v. Natural Answers, Inc., 233 F.3d 456, 
469 (7th Cir. 2000); Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208, 
217-21 (2d Cir. 1999); Mead Data Central, Inc. v. Toyota Motor Sales, 
U.S.A., Inc., 875 F.2d 1026, 1035 (2d Cir. 1989) (J. Sweet, 
concurring). A uniform list of statutory factors would therefore be 
helpful.
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3. Defenses
    We believe that the First Amendment concerns that were expressed in 
the hearing before this Subcommittee last year arising in the context 
of use of a famous mark in connection with legitimate commentary, 
criticism, parody, etc., can be fully addressed either by amending the 
defense set forth in Section 43(c)(3)(A) in H.R. 683 as follows:

        Fair use of a famous mark by another person, including for 
        purposes of comparative commercial advertising or promotion to 
        identify the competing goods or services of the owner of the 
        famous mark. (New language underlined.)

or by adding a new defense to Section 43(c)(3) as follows:

        Use of a famous mark to comment on, criticize, or parody the 
        owner of the famous mark or the goods or services in connection 
        with which the famous mark is used.

                               CONCLUSION

    We, again, commend you, Mr. Chairman, for your continuing 
leadership in striving to improve our intellectual property system. The 
AIPLA looks forward to working with you, the other Members of the 
Subcommittee, and your able staff to support you in any way we can.

    Mr. Smith. Mr. Johnson?

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

    Mr. Johnson. Thank you, Mr. Chairman, 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 over 400,000 members across the United States to 
talk about H.R. 683, the ``Trademark Dilution Revision Act of 
2005.''
    Now, in my written testimony, I discuss the dynamic tension 
between the first amendment and trademark law, and in my oral 
testimony, I would like to talk more about the problems posed 
by this bill, and time permitting, some possible solutions.
    You may remember the ``Joe Chemo'' example in which 
Adbusters magazine used Joe Chemo as kind of a parody of the 
``Joe Camel'' trademark that Camel cigarettes used. I think 
given the language that is in this particular bill about 
designation of source, the Adbusters ad may not be prohibited 
because it is not designating any particular source. But if you 
change the facts just slightly, then I think you can see why 
some of the problems exist with this bill that we are talking 
about.
    First, assume that I have the rights to use Joe Chemo as a 
designation of source and I use him as a mascot for an anti-
smoking campaign where I use Joe Chemo as the mascot on a 
website. Consider that also the Joe Camel is an active 
trademark of Camel cigarettes and is being used to promote 
their product. Now, in order to defray the costs of running the 
website, I go ahead and I put Joe Chemo on some t-shirts and I 
sell these t-shirts to defray the cost of the website and all 
of the money that I get goes back into the website.
    Now, it is likely that H.R. 683 is going to prohibit that 
because Joe Camel, or Camel cigarettes, would be able to come 
in and argue that I am diluting their trademark by using Joe 
Chemo as the designation of source of my website and the t-
shirts that I am selling. So the end result would be that the 
website, which could be a very effective anti-smoking website, 
could be shut down by arguing that I am diluting or blurring or 
tarnishing their trademark.
    Now, under the likelihood of dilution, Camel cigarettes 
wouldn't have to prove that I actually diluted the trademark, 
only that there is a likelihood of dilution, and to the extent 
that I am successful in this anti-smoking campaign, I may well 
have diluted their trademark. Now, by positing my success, 
however, Camel cigarettes is able to come in and argue that 
there is a likelihood of dilution and, therefore, they would be 
able to shut down the website.
    Now, the dilution by tarnishment, when you couple this with 
the likelihood of dilution, you have a likelihood of 
tarnishment cause of action that comes about, and to the extent 
that any parody or criticism evokes unflattering thoughts about 
the owner's product or service, it has resulted in tarnishment 
and it, therefore, can be enjoined. So you have got a situation 
where you have Joe Camel, a suave and debonair figure, 
promoting Camel cigarettes, versus Joe Chemo, a sickly, in-
need-of-treatment camel, and therefore it can be an 
unflattering comparison.
    H.R. 683 uses as a factor in some of its analysis whether 
the user of the junior mark intended to create an association 
with the famous mark. Now, isn't that exactly what you do in a 
parody? Isn't that exactly what I am doing here where I use Joe 
Chemo as a parody, essentially, of a famous mark? So I intend 
to have that type of association as part of a parody.
    Do the exemptions in the current bill help me? Not really. 
It is not comparative advertising in its truest sense, and 
thus, I can't rely upon that as a defense. Some courts have 
held that minimal use of--or minimal income through seeking 
donations and selling t-shirts makes it a commercial enterprise 
and, therefore, takes it out of the non-commercial use 
category. Third, this site is not normally one that would be 
considered news reporting or commentary, so that defense would 
be unavailing, as well.
    So the exemptions really wouldn't provide me much of a 
defense here. In fact, Camel under this bill may be entitled to 
additional remedies beyond an injunction because I willfully 
intended to trade on the recognition of the famous mark.
    So what can be done? Well, one thing that can be done is to 
keep the law as it currently is and require actual dilution, 
but I think there are some problems with that, as well. But if 
you broaden the fair use provision to include all aspects of 
fair use, then I think you solve some of the problems. Also, if 
you require bad faith as an element of the blurring cause of 
action, then you tend to reach the type of harm that this bill 
is intended to reach.
    There are some others that are in my written testimony, so 
I won't go through all of those. But for the reasons stated in 
my written testimony and the analysis that you have heard 
today, I think there are some reservations about H.R. 683 as it 
currently exists, but we are certainly willing to work with the 
Committee to provide a bill that will be more protective of the 
first amendment.
    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 H.R. 638, ``The Trademark Dilution 
Revision Act of 2005.'' 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 or services, regardless of the presence or absence 
of--(1) competition between the owner of the famous mark and other 
parties, or (2) likelihood of confusion, mistake or deception.'' \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\ H.R. 638 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.
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    \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.
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    Numerous other instances of using dilution claims to stifle speech 
have arisen, one of the most recent being Farmers Group, Inc. v. 
Guerrero, a case filed this year in the Federal District Court for the 
Eastern District of Washington. Here, Farmers Group is suing Guerrero 
for a gripe site he administers which is critical of Farmers. Because 
he used the Farmers logo and name on the site, Farmers is claiming, 
among other things, dilution of its trademark and service mark. Yet, if 
Guerrero did not use the Farmers name or logo, visitors to his site 
would be unlikely to determine that Farmers was the target of his ire, 
a fact probably not lost on Farmers.
    The number of cases actually filed in which trademark dilution is 
used to stifle speech is, however, not a good indicator of the harm 
inflicted. Some operators of gripe sites, and other targets of 
trademark holders, simply give up after receiving a notice to cease and 
desist, rather than go to the expense of hiring an attorney and 
fighting. As Mr. Stimson from Kodak Corporation noted in last year's 
hearing, the FTDA is a ``powerful tool,'' and it helps Kodak ``in cease 
and desist letters to stop the dilution at very early stages.'' 
Likewise, it can also stifle speech in its early stages.
    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.
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    ``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 arising from the similarity 
between a designation of source and a famous mark 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? 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.
---------------------------------------------------------------------------
    One could argue that H.R. 638 would not cover the ``Joe Chemo'' 
example because ``Joe Chemo'' does not function as a ``designation of 
source.'' While ``designation of source'' provides some narrowing of 
the application of the FTDA, it does not completely solve the problem. 
Consider this example: If ``Joe Chemo'' was used as the logo of an 
anti-smoking campaign web site, it may well function as a designation 
of source. And, if the web site sold ``Joe Chemo'' t-shirts to raise 
money for the anti-smoking campaign, the use of the logo may be 
considered ``commercial.'' Thus, the trademark holder for ``Joe Camel'' 
may well be able to use the FTDA as amended to silence such a web site.
    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 recognition of the famous mark.'' Once again, this is 
exactly what a parody or criticism does--it trades on the recognition 
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).
---------------------------------------------------------------------------

                                APPENDIX



    Mr. Smith. I am going to recognize the gentleman from 
California for his questions first, and then I will follow up 
after his line of questioning. Mr. Berman?
    Mr. Berman. Thank you very much, Mr. Chairman.
    Basically, I think we probably need a bill. We need to not 
wait until damage is done to do it, particularly since if the 
only real remedy here is closing the barn door, the injunction, 
you probably want to do it when--is it horses that are still in 
the barn? [Laughter.]
    The Supreme Court case, I take it the proponents of the 
change think they need to, in effect, overcome that decision. 
Victor's Little Secret is some store in a mall in Kentucky. 
Everybody who hears about it, I am sure, associates it with 
Victoria's Secret, but I can't imagine anyone who is confused 
by it. No one thinks they are going to Victoria's Secret when 
they go there. What is the reason why Victoria's Secret should 
be able to enjoin Victor's Little Secret from using that name?
    Mr. Lemley. Well, I think the answer is we are concerned 
not so much about one use by one little store in Kentucky, all 
right. We are concerned about what happens if----
    Mr. Berman. Let us say Victor's Little Secret is a national 
chain of adult novelties or whatever.
    Mr. Lemley. Right, and then somebody else can use 
``Victor's Big Secret'' and someone else can use a variety of 
different things. The risk is that, over time, the association 
that consumers have between Victoria's Secret, the mark, and 
the company and the products they provide now becomes not a 
unique association. I hear this name Victoria's Secret and I 
immediately think of this company. Now, I have got to kind of 
sort through in my mind a bunch of different uses. This is 
especially true when the uses are identical, if there are five 
or six different Victoria's Secrets, but it is even true if 
they are not identical.
    Mr. Berman. United Airlines, United Van Lines, United 
Plumbing, United this, United that, I mean----
    Mr. Lemley. No, that is right. There are certainly--and 
this is, I think, why it is important to limit the marks that 
are entitled to protection to marks that really are truly 
famous.
    Mr. Berman. I think United Airlines is pretty famous.
    Mr. Lemley. I think that is right, but I think if it is 
just the term ``United,'' we would say the term ``United'' is 
actually already dilute. You are not entitled to prevent a new 
United-something in a different field from coming around.
    Mr. Berman. And Victoria's Secret is entitled to protection 
from somebody----
    Mr. Lemley. I think that is right because they have that 
uniqueness. There are some large----
    Mr. Berman. But Victor's Little Secret is as different from 
Victoria's Secret as United Van Lines is from United Airlines.
    Mr. Lemley. Maybe. I am not sure that is right, but even if 
it is right, I think the key is that if there was only one 
United in the world, all right, and everyone associated that 
term, ``United,'' with that particular company, that company 
would be harmed by having other people come in and use the 
term.
    Mr. Berman. All right. Let us take Gallo. Gallo is a very 
famous wine maker. Now somebody wants to open up Gallo Shoes. 
Should Gallo Winery be able to enjoin Gallo Shoes from doing 
business?
    Mr. Lemley. I think they should, and in fact, there is a 
case in the Ninth Circuit that enjoins the use of the term 
Gallo by someone whose name is Gallo for selling meats and 
cheese. The only exception, I think, would be where there is 
a----
    Mr. Berman. This is Harry Gallo and he wants to start a 
shoe store.
    Mr. Lemley. I think the answer is if, in fact, you have a 
truly famous mark, you are not entitled to make that use. So 
even names that people want to use for their own brand, if that 
name happens to be ``McDonald'' or ``Kodak,'' courts have shown 
a willingness to forbid the use of it because they want to 
protect the uniqueness of a mark that is, in fact, already in 
that special----
    Mr. Berman. What about Harvey McDoogle who wants to start a 
little coffee shop?
    Mr. Lemley. Well, on the theory that it is too close to 
McDonald's? I think there are factual questions there. My guess 
is it is probably not diluting. It is not sufficiently close to 
McDonald's, but I suppose that is something that we would want 
the courts to figure out.
    Mr. Berman. Mr. Chairman, I guess my time is up, but if we 
have a chance for one more round----
    Mr. Smith. We are not likely to have time because we are 
supposed to stop at 10:30, but if we do----
    Mr. Berman. I thought 11 was when our bill came up.
    Mr. Smith. I was just told by the full Committee 10:30.
    In any case, Professor Lemley, I like your answers except 
that I always wince when I hear you cite the Ninth Circuit---- 
[Laughter.]
    --but we will take confirmation wherever we can find it.
    Professor Lemley and Ms. Gundelfinger and also Mr. Barber, 
thank you for your strong support of the bill at hand. I know, 
Mr. Barber, you have a couple of suggestions, and what I want 
to do is ask Professor Lemley and Ms. Gundelfinger to respond 
to those two suggestions. Professor Lemley has already done so 
to a large extent, but if you have anything else to add, 
Professor Lemley, feel free to do so. We will start with Ms. 
Gundelfinger.
    You may not have seen the testimony ahead of time, Ms. 
Gundelfinger, so let me read to you part of what Mr. Barber 
said. He said he strongly supports H.R. 683 and then he 
mentions these two exceptions. First, a proposed restriction in 
section 43(c)(1) to limit relief only to situations where a 
person uses the diluting mark as a designation of source for 
the person's goods or services is unnecessary and inappropriate 
and should be omitted. And second, the definition and factors 
for determining dilution by blurring in section 43(c)(2)(B) 
should be modified to properly focus on impairment of 
consumers' association between the famous mark and a single 
source as opposed to the mark's distinctiveness.
    Would you comment on those changes that he would like to 
see made?
    Ms. Gundelfinger. Of course. I will start with the 
distinctiveness issue. I actually think our differences at this 
point are really very narrow. I think we are in agreement 
regarding what it is we are trying to protect and we just have 
some disagreement on what the right statutory language ought to 
be.
    In my view, focusing only on single source association, 
first, it raises the same sorts of proof problems we have 
today. The harm is not measurable in expert survey or otherwise 
until long after the damage is done if a plaintiff is required 
to show there has been a disruption between the mark and its 
association with a single source.
    Moreover, I think focusing on the association with a single 
source is misguided because it first ignores also the mark's 
association with certain brand attributes. Every mark has a set 
of brand attributes, and once others start using that same mark 
on other goods and services, you are going to muddy the brand 
attributes of the famous mark.
    And then finally, I think, I fear that if you were to use 
the language proposed by the AIPLA, some courts may interpret 
it something fairly close to a confusion standard. Requiring a 
showing of a disruption of the source, the source association, 
gets darn close to showing a likelihood of or actual confusion. 
So that is why I think it is the wrong language.
    Now, going to your second point on the designation of 
source language, you know, I have been sitting here thinking. 
The AIPLA thinks the designation of source language is too 
loose and they predict catastrophe for trademark owners if we 
adopt it. The ACLU thinks it is not tight enough. I am a 
trademark owner. I represent trademark owners. I think it is an 
acceptable balance. It is an acceptable tradeoff that resolves 
the most important issues that are faced by trademark owners.
    In order to get a judicially accepted, consistently 
enforced statute that is helpful in providing guidance to 
business decision makers, we are going to have to make a 
tradeoff here. I think the designation of source language makes 
the statute so much clearer. It gets us out of the muddy 
analyses that we have seen in a lot of the cases cited by the 
AIPLA. And it protects marks where they need protection most.
    Mr. Smith. Thank you. I happen to agree. I appreciate your 
testimony.
    Professor Lemley, do you have anything to add to that, in 
the interest of time?
    Mr. Lemley. Just one brief thing. Mr. Barber suggested 
dilution laws have never had anything like this. That is not 
exactly right. The Trademark Dilution Act used the rather 
inartful phrase, ``commercial use in commerce'' to describe 
what it was that would be diluting. The legislative history to 
that act suggests that the commercial use part of that term 
was, in fact, designed to bring in the commercial speech 
distinction, that is, to make illegal only speech that proposes 
a commercial transaction.
    Now, that has not actually turned out to be terribly 
successful in the courts because the courts have not understood 
it, and so some people have said, well, if you make any money 
from a use and the use involves a trademark, that might be 
diluting.
    I think the designation of source rule actually adopts what 
this body was trying to reach in 1995 in a clearer form.
    Mr. Smith. Thank you, Professor Lemley.
    Mr. Johnson, Mr. Barber suggested on your concerns about 
freedom of speech amending the defense set forth to say fair 
use of a famous mark by another person, including for purposes 
of comparative commercial advertising or promotion to identify 
the competing goods or services of the owner of the famous 
mark. Would that help you out with your concerns on free 
speech, or not necessarily?
    Mr. Johnson. Well, I think it helps a little bit in the 
sense that it essentially broadens fair use. I am not sure that 
we need anything after ``fair use of a famous mark by another 
person,'' necessarily, but by broadening fair use, I think it 
does help significantly address some of the concerns.
    Mr. Smith. Mr. Barber, you have been the source of a lot of 
these questions. Let me ask you very, very quickly, and Ms. 
Gundelfinger, do you think that this bill will have an adverse 
impact on the small business owner, the independent vendor, 
inventor? You know what I am talking about. Do you think any 
adverse consequences for that kind of an individual?
    Mr. Barber. No, I really don't. This is a very narrow 
statute. It only applies to famous marks, and small business 
owners, you know, there is an infinite supply of marks that 
they can choose from. They don't have to select somebody else's 
famous mark.
    Mr. Smith. Thank you. Ms. Gundelfinger?
    Ms. Gundelfinger. I would just note that, if anything, it 
helps small businesses because the legislation finally clearly 
defines what a famous mark is and it puts everyone on notice.
    Mr. Smith. Which is an improvement over the current 
statute.
    Ms. Gundelfinger. Exactly.
    Mr. Smith. Okay. Thank you all very much.
    The gentleman from California, Mr. Issa, is recognized for 
his questions.
    Mr. Issa. Thank you, Mr. Chairman.
    Professor, I don't think this came out in the earlier 
questioning, or I know it didn't. If you had United Airlines, 
isn't it almost 100 percent sure that United Airlines had to 
disclaim the word ``United'' when it got its mark?
    Mr. Lemley. I think that is correct because there are so 
many other Uniteds out there.
    Mr. Issa. On the other hand, Victoria's Secret, I would 
assume, didn't have to give up either part of it in the 
process. In all likelihood, although there is a Victoria and 
there is a Queen Victoria, neither ``Victoria'' nor ``Secret'' 
is disclaimed, but ``Victor's Secret'' falls right under 
exactly the kind of ripping off of trademarks that goes on that 
has been a problem, I think for every trademark owner. Am I 
missing something there, that likely there was no disclaimer 
there?
    Mr. Lemley. No, I agree.
    Mr. Issa. Mr. Johnson, I was pleased to hear you say what 
you said because it appears as though this legislation does 
stop you from using the fame of a mark to disparage the mark, 
and that is what you think it will do.
    Mr. Johnson. Well, to some extent, yes, I think it will, 
and I think the bill is much better crafted to solve some of 
the problems that have existed before. My position is that it 
doesn't solve all of the free speech issues, though.
    Mr. Issa. But back to your free speech issue, what would be 
the benefit of using a sickly camel if this particular tobacco 
company--and I am not a supporter of tobacco companies, but no 
matter what it is, I don't care if it is a NASCAR with a 
particular number of a particular--well, for example, Dale 
Earnhart's number--what would be the reason you would use a 
particular car and a particular number if you wanted to 
disparage NASCAR if they hadn't already made it famous? Isn't 
there an absolute link that you are admitting when you are 
calling it a parody, but then you are denying when you say you 
disparage it?
    Mr. Johnson. Well, that is my point, is that if you 
essentially say you cannot disparage something because it is a 
famous mark, then you are essentially limiting the speech that 
can be used about that particular famous mark. So the whole 
idea of using Joe Chemo is, again, because it has that link 
with Joe Camel and you are essentially showing the flip side of 
the suave and debonair Joe Camel to the sickly Joe Chemo, which 
you are pointing out is the actual result of the suave and 
debonair lifestyle of Joe Camel.
    So I think the point is that if you are going to indulge in 
effective parody, you almost have to take on a famous mark 
under some--at least under some circumstances.
    Mr. Issa. So your position is that you have to be able to 
rip off somebody's mark in order to disparage cigarettes?
    Mr. Johnson. Well----
    Mr. Issa. Wait a second. Just hear me out, because I am 
absolutely in agreement with what you think this will do and I 
am absolutely in support of doing it. If you want to disparage 
cigarettes, and I encourage people to disparage cigarettes, 
picking the fame of a particular brand and the intellectual 
property that has been built up in this legal product is the 
only way you can disparage it? You can't show a full-color 
picture of a diseased lung and use the words ``cigarettes'' and 
``tobacco,'' which are not trademarks?
    Mr. Johnson. Well, you can, but under the first amendment, 
the whole idea is that you should not be limited necessarily on 
the speech that you use. Now, when you use Joe Camel to 
essentially sell cigarettes to children, why should you then 
say, well, I am going to steer away from Joe Camel because it 
may offend this particular famous mark in showing what the end 
result is if you live the life style of Joe Camel.
    Mr. Issa. Wouldn't you agree that a registered trademark, a 
patent, a copyright, all are constitutional limitations on free 
speech?
    Mr. Johnson. I think that they are to some extent 
constitutional limitations on free speech, yes. But the 
question becomes on can you remove something from the public 
discourse simply because it is a famous mark and I don't 
believe that that is really what the Federal Trademark Dilution 
Act intended, because----
    Mr. Issa. Mr. Johnson, my time is going to run out very 
quickly. I am only asking about the Constitution, not something 
that we flawed individuals did a decade ago. The Constitution 
and the first amendment are simultaneous events. They were 
thought out in concert. The rights to limit other people's use 
and to charge for those uses was anticipated in the 
Constitution and restricted at the same time as we were 
ensuring free speech.
    If you are able to disparage a product by using its name so 
people understand what the product is, or using the 
description, on what basis do you have to go further and use 
the fame and the good will and the artistic genius that was 
created to support that product? Why do you have to use that in 
order to tear it down? Why do you have to use the intellectual 
property if you are able to accurately describe the product and 
disparage it in plain English, understandable? Why do you have 
to take that next step in order to use that intellectual 
property that the Constitution granted the individual?
    Mr. Johnson. First of all, let me point out that, as 
Chairman Smith pointed out, trademark dilution is not something 
that is enshrined in the Constitution. This is purely a 
statutory creation.
    Mr. Issa. And again, I am staying off the statutory. I 
simply want you to answer the question as to original intent in 
the Constitution.
    Mr. Lemley. Could I perhaps speak to that?
    Mr. Issa. Please.
    Mr. Smith. I have to tell you, the gentleman's time has 
expired, and frankly, our Subcommittee's time has virtually 
expired.
    Mr. Issa. But I would love to see it in writing, Mr. 
Chairman.
    Mr. Smith. And if you will respond to the gentleman from 
California's question in writing at length, that would be 
appreciated.
    Let me say I am going to try to squeeze in one question 
each from Mr. Schiff and Mr. Inglis just because of their 
patience and attendance, and I am sorry on your first hearing 
that that is the case, but with debate having begun on the 
floor and with our Committee rules, that is the most we can do 
right now. So the gentleman from California, Mr. Schiff, is 
recognized for a question.
    Mr. Schiff. Thank you, Mr. Chairman, and I will keep it 
very quick.
    I really wanted to just ask the three of you to comment on 
a hypothetical that Mr. Johnson raised. If I understand it 
correctly, Mr. Johnson, your thought was that in the Joe Chemo 
example, that barring the sale of t-shirts to support the 
website, the website itself would not run afoul of the dilution 
law as amended by this bill. However, it would be problematic 
if they sold t-shirts to support the website, which would keep 
the website operating.
    Is that, for the three of you, your collective view of the 
impact of the bill, as well, that the ability to use the Joe 
Chemo image would not be prohibited by the amendments 
represented in this bill, but deriving some kind of a revenue 
of it would be?
    I, I guess, feel a little bit differently about it than my 
colleague. You don't have to use a trademark to disparage a 
product like tobacco, but sometimes it can be very effective 
for the reasons you point out, Mr. Johnson, that showing the 
flip side of Joe Camel can be a very kind of pointed way of 
making the point about tobacco.
    So if the three of you could comment on how you see these 
changes affecting an issue like the one that was raised.
    Mr. Barber. I think I agree in principle with Mr. Johnson 
that that type of use of a famous mark is protected free 
speech. I think courts have been able to handle that just fine 
under basic first amendment and fair use principles. However, 
if there is a concern there that it is unclear whether that 
type of parody is protected, the place to address that is in 
the defenses, and AIPLA has proposed a specific defense to 
address use of a famous mark to comment on, criticize, or 
parody the owner of the famous trademark or the trademark 
owner's goods or services.
    Now, some parodies use a famous mark but are really 
parodying something completely different. The ``Enjoy Cocaine'' 
poster is an example where cocaine has nothing to do with Coca-
Cola. So that is an abuse of the Coca-Cola mark to parody 
something that has nothing to do with the trademark owner, and 
that should not----
    Mr. Schiff. Do you share his view that the derivation of 
the income, though, would make that practice vulnerable under 
this bill where it would not be vulnerable under existing law?
    Mr. Barber. I think the derivation of the income makes it a 
closer case because then it is arguably a commercial use and 
arguably a designation of source. There would be some clarity.
    Mr. Lemley. I actually think the designation of source 
provision in the bill solves this problem. It would not be 
illegal under the bill because you are not using Joe Chemo as a 
brand to attract people for the sale of goods. I think it would 
be a problem if we adopted Mr. Barber's proposal and got rid of 
the designation of source, and that is one of the reasons I 
think we should keep that in the bill.
    Ms. Gundelfinger. And I will just say what he said.
    Mr. Smith. Thank you, Mr. Schiff.
    Mr. Schiff. Thank you.
    Mr. Smith. The gentleman from South Carolina, Mr. Inglis.
    Mr. Inglis. Thank you, Mr. Chairman.
    I wonder if parody is always harmful to the famous brand. 
The maxim in Hollywood is, don't care what you say, just make 
sure to spell it right, or I don't care if you use my name, 
just spell it right. There is no such thing as bad publicity.
    To some extent, we allow these famous brands to come into 
our consciousness and there is sort of a--they spend a great 
deal of money to create that, but we allow them into our lives 
and to our parlance. And so if you use them in parody, it is 
not always harmful, right? In fact, I can see a lot of cases 
where the use of the brands in ``Saturday Night Live'' or 
something like that actually helps the brand. The brand should 
be cheering when ``Saturday Night Live'' is doing a spoof about 
their stuff. Am I right or wrong?
    Ms. Gundelfinger. You are right.
    Mr. Lemley. Yes, absolutely right. Now, not all parodies, 
right? Trademark owners may object to some and may have good 
reason to dislike them, and I guess the only thing that we 
would suggest, I would suggest, and I think the bill 
accomplishes this, is to make sure that the trademark owner 
doesn't get the choice of whether or not to approve a 
particular parody.
    Mr. Inglis. Does anybody else want to comment on that?
    Mr. Barber. Well, I would agree with that, as well. Some 
parodies don't really harm the brands' reputation. Some 
parodies do and some parodies are not--some parodies are 
protected by the first amendment, some aren't. The ``Enjoy 
Cocaine'' example, again, that should not be protected free 
speech and it should be a violation of the dilution statute. 
That is classic tarnishment.
    Ms. Gundelfinger. I believe that most trademark owners 
recognize that once they have a famous mark, their mark is a 
cultural icon, and they recognize that if they can't take the 
heat, they ought to get out of the kitchen.
    Mr. Inglis. That is a good point. Thank you, Mr. Chairman.
    Mr. Smith. Thank you, Mr. Inglis.
    Mr. Berman and I have a final quick question and that is 
this. What if we added as a defense for the free speech that if 
a famous mark was used for parody or criticism or commentary, 
if we added that as a defense, would that solve the problem or 
not? Or would that go too far or not far enough?
    Mr. Barber. If I could address that----
    Mr. Smith. Yes.
    Mr. Barber.--that is exactly what AIPLA has proposed, but 
the designation of source requirement needs to come out.
    Mr. Smith. Do you think we need to do that, Professor 
Lemley?
    Mr. Lemley. I think if you keep designation of source in, 
it is probably redundant, although it wouldn't do any harm to 
do it. It would probably be a good thing. I would not replace 
the designation of source requirement because I think there are 
uses of a mark that ought to be legitimate that wouldn't 
necessarily fit in that particular defense.
    Mr. Smith. Ms. Gundelfinger?
    Ms. Gundelfinger. And I would only add that I agree that 
adding the defenses at this point with the designation of 
source language would be redundant. I would also caution 
against using the fair use language that we currently have in 
the Lanham Act because it is going to create a loop language-
wise with the designation of source and the redundancy is going 
to confuse the courts.
    Mr. Smith. Fair enough. Thank you all for your testimony. 
This has been very, very informative. I am sorry for the 
slightly truncated hearing today, but better this hearing than 
no hearing at all, which was the alternative. Thank you again.
    We stand adjourned.
    [Whereupon, at 10:42 a.m., the Subcommittee was adjourned.]


                            A P P E N D I X

                              ----------                              


               Material Submitted for the Hearing Record

Prepared Statement of 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
    Mr. Chairman, thank you for scheduling this hearing to discuss H.R. 
683, The Trademark Dilution Revision Act of 2005. It has been over nine 
years since the passage of the Federal Trademark Dilution Act, [FTDA] 
and sufficient time has passed to analyze the effects of the dilution 
act on trademark law.
    I think the starting point for any dilution hearing is to 
understand the rationale for the Act. But even before that, we must 
delve into the purpose of trademark law. Trademark law is not a typical 
intellectual property right. It does not emanate from the Constitution 
but rather is a construct of Congressional legislation. The primary 
reason for traditional trademark law rests predominantly on a policy of 
protection of customers from mistake and deception.
    This is very different from the purpose of anti-dilution 
legislation. The goal here is to protect only the very famous 
trademarks from subsequent uses that blur the distinctiveness of the 
mark or tarnish or disparage it. Therefore, dilution applies when an 
unauthorized use of a famous mark reduces the public's perception that 
the mark signifies something unique, singular, or particular. It 
appears then that with anti-dilution laws it is the property right, the 
actual trademark, which is first and foremost being protected.
    This again is different then the treatment of copyrights or 
patents. While we do protect copyrights and patents, it is only for a 
limited time period for the purpose of promoting innovation. This is as 
opposed to anti-dilution laws, which has the potential to create a 
right in perpetuity for the trademark and merely protects one's own 
economic interest. It was therefore initially intended for dilution to 
be used sparingly as an ``extraordinary'' remedy, one that required a 
significant showing of fame. However, now, it seems as if it is used 
frequently as an alternative pleading. Are we allowing the removal of 
far too many words from our vocabulary? 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. 
Therefore, I would like to take the opportunity at this hearing to 
further explore what consumer interests are met with passage of this 
bill.
    In addition, I would like to address the change in the standard of 
dilution from ``actual'' to ``likelihood'' of dilution. I agree that if 
we were to maintain an actual dilution standard, as the Supreme Court 
held in the Victoria Secret case, a number of issues arise including 
how one would 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 those who have been victims of 
dilution describe, death by a thousand cuts, where significant injury 
is caused by the cumulative effect not just one.
    The bill suggests that the resolution is to amend the standard from 
actual to likelihood of dilution. 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 wait until injury 
occurs before bringing suit. Furthermore, it seems as if that was the 
standard Congress had intended initially. However, I am not convinced 
that a likelihood of dilution standard combined with the other 
amendments in the bill do not create an aura of overprotectionism. Is 
there a standard which lies somewhere in between likelihood of dilution 
and actual dilution?
    I suppose this issue may seem unimportant to many who are not 
entrepreneurs. However, just the other day I became aware of how 
pervasive the issue of dilution is. The Rock and Roll Hall of Fame has 
sued the Jewish Rock and Roll Hall of Fame for trademark dilution. 
While I never contemplated admission to either Hall of Fame, I am 
concerned that this bill extends the scope of protection to something 
that merely describes its members and their trade especially when there 
are so many other Hall of Fames out there.
    Finally, I am concerned how, if at all, this will effect first 
amendment and free speech issues. At the last hearing, the ACLU voiced 
concerns relating to stifling critics with the potential weapon of an 
injunction for mere likelihood of tarnishment. They were concerned with 
the balance between the rights of trademark holders and the first 
amendment. I am interested in delving into these issues to see whether 
these concerns are addressed in HR 683.
    I look forward to hearing from the witnesses to discuss how the 
legislation would affect balance in the economic market, trademark 
litigation and free speech forums. I look forward to working with the 
Chairman to further evaluate the Trademark Dilution Revision Act and 
the changes recommended at the hearing today.
    I yield back the balance of my time.
  Letter from Marvin J. Johnson, Legislative Counsel, American Civil 
    Liberties Union, in response to question from Rep. Darrell Issa



    Letter from Alan C. Drewsen, Executive Director, International 
Trademark Association (INTA), and Michael K. Kirk, Executive Director, 
         American Intellectual Property Law Association (AIPLA)



               Letter from J. Jeffrey Hawley, President, 
             Intellectual Property Owners Association (IPO)



Prepared Statement of Susan Barbieri Montgomery, Vice Chair, Section of 
  Intellectual Property Law, on behalf of the Section of Intellectual 
              Property Law of the American Bar Association

    Mr. Chairman and members of the Subcommittee:
    Thank you for the opportunity to offer this statement on behalf of 
the American Bar Association and that Association's Section of 
Intellectual Property Law. My name is Susan Barbieri Montgomery. I am a 
partner at Foley Hoag LLP, and I currently serve as Vice Chair of the 
ABA Section of Intellectual Property Law. The views 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 FTDA 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.
    This testimony supplements the testimony that Robert W. Sacoff, 
Immediate Past Chair of our IP Law Section presented to this 
subcommittee on April 22, 2004. As we mentioned last Spring, we applaud 
the Subcommittee for revisiting the FTDA to identify areas of possible 
amendment and improvement. The Subcommittee has asked the witnesses to 
consider a number of options for amendment to the FTDA as embodied in 
the H.R. 683, the ``Trademark Dilution Revision Act of 2005,'' as 
introduced by Chairman Smith on February 9. The IP Law Section has 
conferred and worked with other associations, namely the International 
Trademark Association (``INTA''), the American Intellectual Property 
Law Association (``AIPLA''), and the Intellectual Property Owners 
Association (``IPO'') (collectively ``Associations'') in trying to 
arrive at common ground on recommended changes to the FTDA.
    While the consultations among the Associations continues, the IP 
Law Section suggests that the Subcommittee focus its efforts on 
amendments to the FTDA that the Associations have agreed upon in 
principle and that are necessary to effectuate the changes necessitated 
by the U.S. Supreme Court's decision in Moseley v. V Secret Catalogue, 
537 U.S. 418 (2003). To this end, the IP Law Section currently is 
drafting an alternative set of suggested amendments to the FTDA that it 
believes will assist the Subcommittee in this effort.

                           EXECUTIVE SUMMARY

    At the hearing on April 22, 2004, the IP Law Section testified that 
it was in favor of amending the FTDA in three ways made important by 
the Supreme Court's Moseley decision: (1) creating a ``likelihood of 
dilution'' standard; (2) providing an express cause of action for 
dilution by tarnishment; and (3) extending dilution protection for non-
inherently distinctive marks. The Associations agree in principle with 
the need to amend the FTDA in light of the Moseley decision to 
accomplish these three points. While the IP Law Section generally 
favors amendments to the FTDA that accomplish only these changes, it 
recognizes the concerns some organizations have raised before this 
Subcommittee about the scope of the fair use doctrine and First 
Amendment principles. Therefore, the IP Law Section would support 
amendments to the FTDA which serve simply to clarify the application of 
fair use principles and these defenses in a manner consistent with the 
original congressional intent behind the FTDA, while avoiding the 
introduction of new, unnecessary and confusing language such as 
``designation of source.''
    Overall, the IP Law Section favors amendments that will make these 
changes with as few revisions to the current statutory language as 
possible. This conservative approach will avoid the inevitable 
uncertainty and confusion caused by extensively changing the statutory 
language of the FTDA. This approach also reflects the IP Law Section's 
view that there is no compelling need to significantly re-work the 
statutory language of the FTDA beyond addressing the issues raised in 
Moseley.
    In regard to H.R. 683, the IP Law Section believes that the 
introduction of new language such as ``designation of source,'' 
creating factors to determine dilution by blurring, changing factors to 
consider a mark's fame and curtailing the scope of the FTDA to a much 
smaller class of marks, not only are unnecessary to respond to the 
issues raised in Mosele,y but would confuse courts, consumers and 
trademark owners.

    I. DRAFTING TO ADDRESS ONLY THE PROBLEMS RAISED BY MOSELEY AND 
               CLARIFYING FIRST AMENDMENT/FAIR USE ISSUES

    The decision in Moseley v. V Secret Catalogue created a need to 
amend the FTDA to effectuate what Congress originally intended. These 
changes include specifying that: there should be a ``likelihood of 
dilution'' standard; dilution by tarnishment as well as dilution by 
blurring should be actionable; and marks that have acquired 
distinctiveness from use in the marketplace are eligible for dilution 
protection under the FTDA to the same extent as marks that are 
inherently distinctive. Several provisions of H.R. 683 go far beyond 
these stated goals. In particular, H.R. 683 contains language that 
narrows the scope of the FTDA and provides explanatory language for 
provisions that were not at issue in Moseley. To this extent, the bill 
would rewrite what Congress intended when it first adopted the FTDA. 
The IP Law Section does not agree that case law interpreting the FTDA 
since its adoption, beyond the issues raised by the Moseley decision, 
justifies these changes.
    We respectfully submit that if the Subcommittee focused on the 
issues specifically addressed in Moseley, it would be understood by 
consumers, trademark owners and the courts as an attempt to bring the 
FTDA back into line with what Congress intended the statute to mean. By 
taking a narrow and conservative approach to amending the FTDA, the 
meaning and consequences of the language changes will be much clearer. 
By contrast, by addressing issues that have no clear need for a 
legislative solution, H.R. 683 runs the risk of undermining over eight 
years of case law on the FTDA by introducing new and different terms 
and by changing the scope of the law. This type of wholesale change 
likely would cause confusion and uncertainty in the courts as they 
grapple with the meaning of the new language. The IP Law Section also 
sees no justification in the case law for altering the statute in such 
a dramatic manner.
    While there are always aberrant cases under any statute, and some 
decisions interpreting the FTDA could be questioned, we believe that 
courts have not struggled in interpreting and applying the FTDA beyond 
the points addressed in Moseley, and will not have a difficult time 
interpreting the FTDA after Congress addresses these specific points. 
Certainly, a clarification of the application of fair use/First 
Amendment principles and certain defenses in a manner consistent with 
the original congressional intent also would address the concerns some 
have raised that the statute is unclear or that it provides trademark 
owners with rights that are too broad and unchecked.

                  II. PROBLEMATIC LANGUAGE IN H.R. 683

    The IP Law Section has focused on several provisions of H.R. 683 
that we believe go beyond not only what is necessary to respond to 
Moseley, but also what Congress intended in enacting the FTDA.

A. Designation of Source
    H.R. 683 contains an amendment limiting the applicability of the 
FTDA to cases where the defendant is using the famous mark as a 
``designation of source.'' We believe this proposed language is 
undesirable because:

        (1)  the proposed amendment of the FTDA to require use of the 
        famous mark by a defendant as a ``designation of source'' would 
        unduly limit the scope of the statute, while attempting to 
        solve a problem that can be better addressed by simply 
        clarifying the applicability and scope of fair use principles 
        and certain defenses as discussed below;

        (2)  The phrase ``designation of source'' is not found in the 
        Trademark Act and the introduction of this new term would 
        immediately raise a definitional question as to whether it is 
        something different from the existing statutory terms, namely, 
        trademark, service mark, or designation of origin, and if so, 
        how does it differ?;

        (3)  Even if the definitional problem is solved, the proposed 
        amendment would undesirably limit the scope of dilution 
        protection and introduce a whole new defense, provoking 
        arguments over the nature of a defendant's use of the mark--
        whether defendant uses the famous mark as a ``designation of 
        source'' or not--when the better focus for the court's 
        attention would be whether a fair use defense should apply in 
        view of current case law; and,

        (4)  Certain types of uses (in addition to fair uses) would be 
        undesirably and unnecessarily exempted from the statute. For 
        example, use of a famous mark as a domain name and obscene uses 
        seemingly would not qualify as designations of source and thus 
        not fall within the statute's scope. Use by a defendant of a 
        famous mark as a generic term would seem to be quintessential 
        dilution, yet would not fall within the statute.

    Proponents of the use of the ``designation of source'' language 
have urged that its proposal will prevent ``nominative'' or 
``referential'' fair uses as well as ``legitimate parody and satire'' 
from falling within the realm of the statute. However, the case law 
does not indicate a problem in the area of nominative fair use, and the 
addition of ``use as a designation of source'' introduces other 
problems and potential for mischief without any assurance that it will 
adequately address the concerns about inconsistent decisions in the 
parody and fair use area.

Fair Use Issues
    A review of fair use issues under the FTDA reveals that the use of 
``designation of source'' language is not necessary to address First 
Amendment/fair use concerns. The FTDA added subsection (c) to Sec. 43 
of the Lanham Act, providing a claim for dilution of the 
distinctiveness of a famous trademark. Subsection (c)(4) already 
provides that three uses of a famous trademark are not actionable:

        (4) The following shall not be actionable under this section:
          (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.

    The principal legislative history, the House Report on the FTDA, 
addresses these fair use exemptions in two places. In the ``Background 
and Need for the Legislation,'' the Report states:

        The proposal adequately addresses legitimate First Amendment 
        concerns espoused by the broadcasting industry and the media. 
        The bill will not prohibit or threaten ``noncommercial'' 
        expression, as that term has been defined by the courts. 
        Nothing in this bill is intended to alter existing case law on 
        the subject of what constitutes ``commercial'' speech. The bill 
        includes specific language exempting from liability the ``fair 
        use'' of a mark in the context of comparative commercial 
        advertising or promotion as well as all forms of news reporting 
        and news commentary. The latter provision which was added to 
        H.R. 1295 as a result of an amendment offered by Congressman 
        Moorhead that was adopted by the Committee, recognizes the 
        heightened First Amendment protection afforded the news 
        industry.

H.R. Rep. No. 104-374, at 4 (1995), reprinted in 1995 U.S.C.C.A.N. 
1029, 1031.
    The House Report also addresses the fair use provision in the 
``Section-by-Section Analysis:''

          A new Section 43(c)(4) sets forth various activities that 
        would not be actionable. This section is designed to preclude 
        the courts from enjoining speech that courts have recognized to 
        be constitutionally protected. Section (4)(A) of the bill 
        provides that the ``fair use'' of a famous mark for purposes of 
        comparative advertising, for example, is not actionable. 
        Section (4)(B) of the bill expressly incorporates the concept 
        of ``commercial'' speech from the ``commercial speech'' 
        doctrine, and proscribes dilution actions that seek to enjoin 
        use of ``famous'' marks in ``non-commercial'' uses (such as 
        consumer product reviews). Section (4)(C) expressly recognizes 
        that the use of ``famous'' marks in the context of all forms of 
        news reporting and news commentary is not actionable. Nothing 
        in this section of the bill is intended to alter existing case 
        law on the subject of what constitutes ``commercial'' speech.

House Report at 8, 1995 U.S.C.C.A.N. 1035.
    Although the Senate committee did not issue a formal report, a 
section-by-section analysis was printed in the Congressional Record 
with the consent of the Senate with the text of the Senate bill and the 
remarks made by Senator Hatch when he introduced the Senate bill. That 
analysis provides:

          A new Section 43(c)(4) sets forth various activities that 
        would not be actionable. These activities include the use of a 
        famous mark for purposes of comparative advertising, the 
        noncommercial use of a famous mark, and the use of famous mark 
        in the context of news reporting and news commentary. This 
        section is consistent with existing case law. The cases 
        recognize that the use of marks in certain forms of artistic 
        and expressive speech is protected by the First Amendment.

141 Cong. Rec. S19, 306-11, S19, 311 (Dec. 29, 1995) (statement of Sen. 
Hatch).
    In addition, Senator Hatch's remarks addressed the fair use 
provision:

          he proposal adequately addresses legitimate first amendment 
        concerns espoused by the broadcasting industry and the media. 
        The bill will not prohibit or threaten noncommercial 
        expression, such as parody, satire, editorial and other forms 
        of expression that are not a part of a commercial transaction. 
        The bill includes specific language exempting from liability 
        the `fair use' of a mark in the context of comparative 
        advertising or promotion.

141 Cong. Rec. S19, 306-11, S19310 (Dec. 29, 1995) (statement of Sen. 
Hatch).
    Senator Hatch's remarks on the exemptions from liability were 
identical to the remarks made by Representative Moorhead on the 
exemptions from liability when he introduced the House bill, except 
that Representative Moorhead's remarks included the following 
additional phrase at the end of the last sentence addressing fair use: 
``. . . and all forms of news reporting and news commentary.'' 141 
Cong. Rec. H14317-18, H14317 (Dec. 12, 1995) (statement of Sen. 
Moorhead).
    Overall, the FTDA in Section 43(c)(4) acknowledges First Amendment 
interests by providing that: ``Noncommercial use of a mark [and] all 
forms of news reporting and news commentary'' are not actionable under 
the FTDA. In this context, ``noncommercial'' means speech that ``does 
more than propose a commercial transaction.'' Mattel, Inc., v. MCA 
Records, Inc., 296 F.3d 894, 906 (9th Cir. 2002). Mixed commercial/
noncommercial speech is classified as noncommercial. Id. The First 
Amendment protects speech critical of a company or its practices from 
tarnishment claims, which arise under dilution law. Id. at 906-907. 
Finally, a defendant's use of plaintiff's mark for political speech may 
be viewed as noncommercial and hence exempt from the FTDA. MasterCard 
Int'l. Inc. v. Nader 2000 Primary committee, Inc., 2004 WL 434404 at *9 
(S.D.N.Y. March 8, 2004).
    The courts have not been troubled by the absence of an exemption 
from liability for ``nominative'' uses of trademarks in dilution 
actions and have applied the nominative fair use doctrine developed in 
infringement actions to dilution actions. Playboy Enter. v. Welles, 7 
F. Supp. 2d 1098 (S.D. Cal. 1998), aff'd in part and rev'd in part, 279 
F.3d 796 (9th Cir. 2002); Clark v. America Online, No. 98-5650, 2000 WL 
33535712 (C.D. Cal. Nov. 30, 2000).
    By contrast, the cases involving parody or satire require a close 
examination to determine the factors that have apparently led to the 
results in those cases, and, arguably, they have not been as broadly 
exempted from liability as one might have expected given the 
legislative history. Part of the reason is that the FTDA ``expressly 
incorporates the concept of `commercial' speech from the `commercial 
speech' doctrine'' in First Amendment cases, as the House Report 
states. H.R. Rep. No. 104-734, at 4. Unfortunately, even though this 
exemption was not intended to alter existing case law on the subject of 
what constitutes ``commercial'' speech, the case law on the difference 
between ``commercial' and ``noncommercial'' speech was not clear before 
the FTDA was passed. Accordingly, a great deal of analysis and 
discussion has been devoted to this distinction in dilution cases 
involving parody or satire and the results are not always consistent. 
Nonetheless, this development lends itself to a clarification of the 
scope of the fair use and not the use of a phrase, such as 
``designation of source,'' which would have unintended consequences.
    Indeed, the analysis used by the Ninth Circuit Court of Appeals in 
Mattel, Inc., v. MCA Records, Inc., 296 F.3d 894, 906 (9th Cir. 
2002)(J. Kozinski), in finding that a parody of BARBIE was not a 
violation under the FTDA, arguably provides a roadmap that courts may 
follow in applying the FTDA to parody and satire cases and the promise 
of consistency without the need for further legislative changes. cf., 
M. Cantwell, Confusion, Dilution and Speech: First Amendment 
Limitations on the Trademark Estate: An Update, 94 Trademark Rep. 547, 
579 (2004). Judge Leval, in discussing the Mattel case and the FTDA, 
stated: ``It is important that courts take seriously their delegated 
duty to interpret the Act. They must follow Judge Kozinski's bold 
model, employing `fair use' limitations to protect free expression.'' 
P. Leval, Trademark: Champion of Free Speech, 27 Colum. J.L. & Arts 187 
(2004).

Clarifying the Application of Fair Use and Various Defenses Without 
        Dramatic Change
    The significant factors that have emerged in determining whether to 
apply the noncommercial use exemption have been summarized by one 
commentator:

        (1) the nature of the parody or satire, that is, whether it 
        involves (a) speech on a matter of public concern or (b) 
        offensive or illicit subject matter (the so-called sleaze 
        factor); (2) whether the plaintiff's mark is directly targeted 
        or used to lampoon a third party, that is, whether the use is 
        (a) a parody or (b) a satire; and (3) whether the parody or 
        satire appears (a) in traditional medium of expression, such as 
        a magazine, movie, or song or (b) on a product.

M. Cantwell, Confusion, Dilution and Speech: First Amendment 
Limitations on the Trademark Estate: An Update, 94 Trademark Rep. 547, 
565 (2004). ``It is rare for the defendant to prevail without being 
able to establish at least one of the `a' categories, above.'' Id. at 
565.
    Many courts have found that certain parodies or cases involving 
criticism of a plaintiff are beyond the scope of the FTDA, see, e.g., 
Mattel, Inc., v. MCA Records, Inc., 296 F.3d 894, 906 (9th Cir. 2002); 
American Family Life Ins. Co. v. Hagan, 266 F. Supp.2d 682 (N.D. Ohio 
2002). Nonetheless, some in the trademark community apparently believe 
that a few questionable decisions have created a bad name for dilution 
actions. However, it should be recognized that any inconsistencies in 
the state of the law in parody and satire cases are not unique to 
dilution cases, and extend to infringement cases as well. M. Cantwell, 
Confusion, Dilution and Speech: First Amendment Limitations on the 
Trademark Estate: An Update, 94 Trademark Rep. 547 (2004).
    Finally, the specific language in the exemption section of Section 
43(c) pertaining to fair use arguably is somewhat ambiguous. Although 
the House Report cites that comparative use as an ``example'' of fair 
use, House Report at 8, 1995 U.S.C.C.A.N. 1035, the statutory language 
of Section 43(c)(4)(A) on its face limits the fair use exemption in 
subparagraph (A) only to comparative advertising or promotion.
    Clarifying the FTDA so that the application of the fair use/First 
Amendment principles are clear to courts, the consumer public, and 
trademark owners would address the concerns some have raised about the 
scope and meaning of the statute. For example, the IP Law Section 
believes that amendments of the type proposed by AIPLA on this issue 
would clarify the application of fair use principles in the FTDA 
without a major change in the statutory language. See February 17, 
2005, Statement of Bill Barber on behalf of the American Intellectual 
Property Law Association at pages 15-16.
    In addition, the IP Law Section believes that an amendment to 
Section 43(c) to specify that certain defenses in Section 33(b) of the 
Lanham Act, including the fair use provisions in Section 33(b)(4), also 
apply to dilution claims under the FTDA would help. In particular, 
Section 33(b)(4) provides ``[t]hat the use of the name, term, or device 
charged to be an infringement is a use, otherwise than as a mark, of 
the party's individual name in his own business . . . or of a term or 
device which is descriptive of and used fairly and in good faith only 
to describe the goods or services of such party, or their geographic 
origin. . . .'' 15 U.S.C. 1115(b)(4). This fair use defense protects 
``the right of society at large to use words or images in their primary 
descriptive sense.'' KP Permanent v. Lasting Impression I, Inc., 125 
S.Ct. 542, 551 (U.S. Supreme Court, 2004).
    These types of amendments to clarify the application of the fair 
use doctrine and relevant defenses can be accomplished much less 
drastically than the use of ``designation of source'' in H.R. 683. 
Indeed, the Associations have exchanged proposals on such amendments to 
Section 43(c) and are continuing to discuss this point. In particular, 
the IP Law Section has circulated proposals for discussion by the 
Associations that would clarify the application of fair use and certain 
defenses in Section 33(b), without using the troublesome phrase 
``designation of source.'' The I.P. Law section believes that while 
these amendments have the benefit of not changing the congressional 
intent behind the FTDA, they do address the concerns of those who 
believe that the status of the fair use doctrine and these defenses 
should be clarified.

B. Dilution By Blurring Factors
    The concept of ``dilution by blurring'' has existed for decades 
through interpretation and application of state dilution statutes by 
the courts. See, e.g., Cal. Bus. & Prof. Code, 14330; Ill. Rev. Stats. 
Ch. 765, Sec. 1035/15; New York Gen. Bus. L. Sec. 368d. Over these 
years, federal courts, as well as state courts, have ruled on 
``dilution by blurring'' under these state laws. See, e.g., Polaroid 
Corp v. Polaroid, Inc., 319 F.2d 830 (7th Cir. 1963). There is uniform 
recognition that the definition of ``dilution'' in the FTDA likewise 
clearly encompasses ``dilution by blurring.'' Thus, for over eight 
years, courts have also interpreted and applied the concept of 
``dilution by blurring'' under the FTDA.
    H.R. 683 would add six specifically enumerated factors to be 
considered in the determination of whether dilution by blurring has 
occurred. The IP Law Section does not favor such an amendment. Rather, 
we believe that there is no need to disturb the ongoing development of 
the concept of dilution by blurring through the case law. We agree with 
the Second Circuit in Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208 
(2d Cir. 1999), when it advocated a ``cautious and gradual approach'' 
to the development of factors to be considered in ``dilution by 
blurring.'' In enumerating 10 factors that it considered in Nabisco, 
the Second Circuit warned:

        We make no suggestion that the factors that we have focused on 
        exhaust the test of what is pertinent. New fact patterns will 
        inevitably suggest additional pertinent factors. In short, we 
        think no court should, at lease at this early stage, make or 
        confine itself to a closed list of factors pertinent to the 
        analysis of rights under the new antidilution statute.

191 F.3d at 228.
    Likewise, the IP Law Section believes that adding a specific set of 
factors to be considered in dilution by blurring, even if they are non-
exclusive as in H.R. 683, will likely discourage the courts from 
considering other factors which may be appropriate under different 
scenarios and will unnecessarily disturb, and create uncertainty with, 
the decades of common law which has already been developed regarding 
this concept.

C. Factors For Determining Fame
    The Federal Trademark Dilution Act currently enumerates eight non-
exclusive factors that a court may consider in determining if a mark is 
``distinctive and famous'' and, thus, eligible for protection under the 
Act. H.R. 683 suggests a different approach. Its terms require that, in 
order to be eligible for dilution protection, a mark must be ``famous'' 
and that a mark is famous ``if it is widely recognized by the general 
consuming public of the United States as a designation of source of the 
goods or services of the mark's owner.'' H.R. 683 would also delete the 
current fame factors in the FTDA and provide that:

        In determining whether a mark possesses the requisite degree of 
        recognition, a court may consider all relevant factors, 
        including but not limited to the following: (i) The duration, 
        extent, and geographic reach of advertising and publicity of 
        the mark, whether advertised or publicized by the owner or 
        third parties(;) (ii) The amount, volume, and geographic extent 
        of sales of goods or services offered under the mark(;) [and] 
        (iii) The extent of actual recognition of the mark.

    The IP Law Section believes that any change in the currently 
enumerated fame factors may be interpreted by the courts as repudiation 
by Congress of their relevancy. The factors that would be deleted 
include ``the degree of recognition of the mark in the trading areas 
and channels of trade of the mark's owner and the person against whom 
the injunction is sought,'' a factor relied upon by the courts in 
applying the concept of niche fame. As discussed below, we oppose any 
change to the FTDA either in support of or in opposition to the concept 
of niche fame because there is no consensus among trademark owners, 
courts, or practitioners on the issue.
    In addition, the IP Law Section opposes any proposal to introduce 
new terms into the FTDA within the proposed factors indicating that for 
marks to be eligible for dilution protection they must be both 
``famous'' and ``substantially unique.'' H.R. 683 does not contain this 
language, but the Associations recently have discussed such a proposal. 
The IP Law Section believes that the addition of a ``substantially 
unique'' requirement would render application of the FTDA even more 
unpredictable. This is because such a phrase appears nowhere else in 
the Lanham Act. Thus, because there is no track record of 
interpretation, the phrase is not subject to precise meaning.

D. Niche Fame
    H.R. 683 would amend Section 43(c) to provide that a mark ``is 
famous if it is widely recognized by the general consuming public of 
the United States.'' This requirement, (and the three factors added to 
this section by H.R. 683 to determine whether a mark possesses the 
requisite degree of recognition discussed above), narrow the scope of 
the FTDA by denying protection to a variety of marks that currently are 
protected under the FTDA. In particular, this ``widely recognized'' 
language would exclude marks that have achieved fame in specific niche 
markets defined by industry, consumer group, price group or, to a 
lesser extent, geography. This change was not part of the original 
intent of the FTDA and is not necessary in light of Moseley.
    As noted above, we do not support any changes either to bolster or 
eliminate coverage of marks that have achieved niche fame, because 
niche fame is an issue better left to the judiciary. There is no 
consensus in the trademark law community on how to address the issue of 
niche fame. Therefore, the IP Law Section urges the Subcommittee to 
reject the use of ``widely recognized'' as well as the three factors in 
proposed Section 43(c)(2)(A) of H.R. 683.

                            III. CONCLUSION

    The Subcommittee's effort to respond to the Moseley decision is a 
necessary undertaking, but one that the IP Law Section submits should 
not be used as an opportunity to change the original congressional 
intent behind the FTDA. Moseley presents a need for legislative changes 
to create a ``likelihood of dilution'' standard, provide an express 
cause of action for dilution by tarnishment, extend dilution protection 
for non-inherently distinctive marks, and clarify the application of 
the fair use doctrine and various defenses in actions alleging 
dilution. The Section of Intellectual Property Law recommends these 
amendments, and only these, to the Federal Trademark Dilution Act.

                                 
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