[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
______
U.S. GOVERNMENT PRINTING OFFICE
98-924 WASHINGTON : 2005
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
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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
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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.
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\1\ 123 S. Ct. 1115 (2003).
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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\
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\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).
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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\
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\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).
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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
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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).
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(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\
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\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].'').
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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.''
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\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).
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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
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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:
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\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
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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.
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\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.
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\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).
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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.
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\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).
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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).
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\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
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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.
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\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).
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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.
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\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).
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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.
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*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.
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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).
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\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.
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\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).
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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.
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\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.
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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\
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\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
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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.
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\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).
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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\
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\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).
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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\
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\5\ Id. at 462.
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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\
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\6\ 15 U.S.C. 1127.
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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.
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\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.
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\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.
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\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.
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\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).
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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\
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\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.''].
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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\
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\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.
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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.
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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.
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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.
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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\
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\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.