Trademark Dilution Reform Act

BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM The Trademark Dilution Revision Act of 2005: Breathing Life Back into the Federal Dilution Statute William G. Barber ∗ INTRODUCTION On January 16, 1996, the much anticipated Federal Trademark Dilution Act (“FTDA”) 1 finally became law. Highly celebrated at the time among trademark owners and practitioners, the new statute promised to bring national uniformity and badly needed guidance to trademark dilution jurisprudence previously developed under a patchwork of vague and poorly drafted state statutes. Unfortunately, the FTDA’s promise has not been fulfilled. Through a series of unfortunate decisions culminating with the Supreme Court’s opinion in Moseley v. V Secret Catalogue, Inc., 537 U.S. 418 (2003), the FTDA has been misconstrued, misapplied, and emasculated to such an extent that it is now almost worthless to trademark owners. Hopefully, Congress will soon enact the Trademark Dilution Revision Act of 2005 (H.R. 683), bringing much needed reforms to federal dilution law. I. PRE-FTDA LANDSCAPE Prior to 1996 there were two main problems hindering the development of trademark dilution law. First, there was no federal ∗ Board of Directors and Chairperson of the AIPLA Trademark Dilution Bill Task Force; Partner, Pirkey Barber LLP, Austin, Texas. The opinions expressed in this article are solely those of the author and should not be attributed to Pirkey Barber LLP or any of its clients. 1 15 U.S.C. §§ 1125(c), 1127 (2000). 1113 BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 1114 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. 16:1113 dilution statute. Instead, dilution jurisprudence was governed by various state statutes, with only about half of the states having any dilution statutes. This resulted in rampant forum shopping, and left owners of famous marks powerless to prevent dilution of their marks by local users in states lacking a dilution statute. Second, the state statutes that did exist at that time tended to be very poorly drafted. Most of them tracked Section 12 of the 1964 Model State Trademark Bill (“MSTB”), which provided as follows: Likelihood of injury to business reputation or of dilution of the distinctive quality of a mark registered under this Act, or a mark valid at common law, or a trade name valid at common law, shall be a ground for injunctive relief notwithstanding the absence of competition between the parties or the absence of confusion as to the source of goods or services. 2 Among the glaring deficiencies of the 1964 MSTB and the many state statutes tracking its language, there is virtually no guidance on which marks qualified for dilution protection. Indeed, the scope of the 1964 model statute appeared to encompass any “registered” or “valid” mark. Similarly, these state statutes provided no definition of the phrases “injury to business reputation” and “dilution of the distinctive quality of a mark,” nor any guidance on how courts should determine those issues. Not surprisingly, courts have had considerable difficulty construing and applying these vague and broadly worded state statutes, leading to significant skepticism and hostility toward the dilution doctrine. 3 As stated in the Restatement (Third) of Unfair Competition, “[a]t first the courts applied the statutes reluctantly, if at all. . . . Some courts, and numerous commentators expressed fear that the uncertain limits of the antidilution cause of action 2 J. T. MCCARTHY, 3 MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION § 22:8 (4th ed. 2006) [hereinafter MCCARTHY]. 3 See Jordache Enters., Inc. v. Hogg Wyld, Ltd., 828 F.2d 1482, 1489 (10th Cir. 1987) (“It has been widely observed that many courts have been hostile to state antidilution statutes.”); Allied Maint. Corp. v. Allied Mech. Trades, Inc., 369 N.E.2d 1162, 1165 (1977) (noting “the absence of judicial enthusiasm for the anti-dilution statutes”). BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 2006] FEDERAL DILUTION STATUTE 1115 would unduly expand the ability of trademark owners to monopolize language and inhibit free competition.” 4 II. THE FTDA A. Key Features (and Flaws) in the FTDA In 1996, Congress finally enacted a federal dilution statute: the FTDA. This statute was first proposed in the late 1980s as part of the bill that eventually became the Trademark Law Revision Act of 1988. However, Congress removed the dilution provisions from that bill, and the FTDA did not make it through Congress until several years later. The FTDA included a number of key features that distinguished it from earlier state dilution statutes. Unfortunately, as discussed in this article, some of these features have turned out to be flaws that seriously impair the FTDA’s effectiveness. 1. Limitation to “famous” marks Unlike the prior state dilution statutes, the FTDA explicitly limits its coverage to “famous” marks. 5 This was certainly a welcome development, providing courts better guidance on which marks should qualify for dilution protection. Prior to the FTDA, many courts had tried to rein in state dilution statutes by reading in a requirement that the plaintiff’s mark be strong to qualify for protection.6 For example, the Second Circuit said it has become “talismanic” that a cause of action under the New York dilution statute requires “an extremely strong RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 25 cmt. b (1995). 15 U.S.C. § 1125(c)(1) (2000). 6 See MCCARTHY, supra note 2, § 24:108 (“To save the dilution doctrine from abuse by plaintiffs whose marks are not famous and distinctive, a large neon sign should be placed adjacent wherever the doctrine resides, reading: ‘The Dilution Rule: Only Strong Marks Need Apply.’ Although state dilution statutes do not explicitly require that the protected mark be ‘strong’ . . . this requirement has been placed in the dilution doctrine by the vast majority of judicial opinions.”). 5 4 BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 1116 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. 16:1113 mark.” 7 Similarly, the Ninth Circuit has stated that “anti-dilution statutes [such as the California statute] are designed to protect only strong, well-recognized marks.” 8 Unfortunately, courts have not arrived at a consistent analytical approach to determine whether a mark is “strong” for purposes of qualifying for state dilution protection. For example, the Ninth Circuit seems to require that the mark be well known in the marketplace. 9 The Fifth Circuit has held that under Texas and Louisiana law, the “strength” requirement may be met if the mark is highly distinctive, even if it is relatively unknown in the marketplace. 10 Courts interpreting the New York dilution statute have implied that “strength” can arise through either marketplace renown or high distinctiveness. 11 The FTDA’s explicit requirement of fame thus represented a significant improvement in giving clarity to this issue. 2. Fame factors In addition to an explicit requirement that the plaintiff’s mark be famous, the FTDA goes on to attempt to give courts guidance on how to determine which marks qualify for dilution protection by listing the following factors: In determining whether a mark is distinctive and famous, a court may consider factors such as, but not limited to— (A) the degree of inherent or acquired distinctiveness of the mark; 7 Mead Data Ctr., Inc. v. Toyota Motor Sales, U.S.A., Inc., 875 F.2d 1026, 1032 (2d Cir. 1989) (Sweet, J. concurring) (citing Allied, 369 N.E.2d at 1166); accord Sally Gee, Inc. v. Myra Hogan, Inc., 699 F.2d 621, 625 (2d Cir. 1983). 8 Accuride Int’l, Inc. v. Accuride Corp., 871 F.2d 1531, 1539 (9th Cir. 1989). 9 See Fruit of the Loom, Inc. v. Girouard, 994 F.2d 1359, 1362–63 (9th Cir. 1993) (mark “must at least be mature and well-known” to qualify for dilution protection). 10 Advantage Rent-A-Car, Inc. v. Enterprise Rent-A-Car, Co., 238 F.3d 378, 381 (5th Cir. 2001). 11 See Mead, 875 F.2d at 1030–31; Sally Gee, 699 F.2d at 625; Allied, 369 N.E.2d at 1166, 198 U.S.P.Q. (BNA) at 422. BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 2006] FEDERAL DILUTION STATUTE 1117 (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 of 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. 12 Although providing courts guidance on dilution issues is an admirable goal, this list of factors is problematic in several respects. For example, the preamble confusingly states that these factors determine whether a mark is “distinctive and famous” (not just famous). 13 Does that mean “distinctive” is a separate requirement from “famous”? If so—and given that all valid marks are “distinctive” either inherently or through acquired distinctiveness 14 —what does the “distinctive” requirement mean in this context? In addition, the statute does not identify which factors in the list are relevant to fame, which are relevant to distinctiveness, and which may be relevant to both. 15 Several of the factors, such as channels of trade (E), third-party use (G), and registration status (H), seem only marginally relevant to fame. On 12 13 14 15 15 U.S.C. § 1125(c)(1) (2000). Id. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769 (1992) See 15 U.S.C. § 1125(c)(1) (2000). BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 1118 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. 16:1113 the other hand, other specified factors, such as duration and extent of use (B), duration and extent of advertising and publicity (C), geographical reach (D), and the mark’s degree of recognition (F), are clearly probative of fame. 16 3. Definition of “dilution” Another way the FTDA attempted to improve over state dilution statutes was to try to define “dilution”: The term “dilution” means the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of— (1) competition between the owner of the famous mark and other parties, or (2) likelihood of confusion, mistake, or deception. 17 Once again, although providing guidance on dilution issues is laudable, this vague definition has not proven very useful in guiding courts as to when a particular use dilutes a famous mark. 4. “Causes dilution” Of all the differences between the FTDA and prior state dilution statutes, one has proven to be far and away the most significant—and most problematic of all. The difference is subtle, and appears to have been completely unintentional by the drafters of the FTDA. Prior to the FTDA, state dilution statutes typically proscribed uses “likely” to dilute the distinctive quality of the plaintiff’s mark. However, for reasons unknown, the drafters of the FTDA did not use the term “likely” or “likelihood” in the federal bill.18 Rather, the FTDA prohibits use that “causes dilution of the distinctive quality of the famous mark.” 19 It is far from clear whether the drafters intended to impose a different standard for liability as compared to the 16 17 18 19 Id. 15 U.S.C. § 1127 (2000). Id. Id. BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 2006] FEDERAL DILUTION STATUTE 1119 traditional “likelihood of dilution” standard that had been in place for decades under state dilution statutes. Indeed, it would seem that no one even noticed at the time that different language had been drafted into the federal bill. There is virtually no mention of this difference or its intent anywhere in the legislative history of the FTDA. 20 Nevertheless, and as discussed further below, this difference in language has saddled plaintiffs with the almost impossible burden of showing actual dilution in order to prevail on a federal dilution claim. B. Series of Unfortunate Decisions Construing the FTDA Since its passage in 1996, courts have issued a series of decisions that have severely compromised the effectiveness of the FTDA. 1. Denial of dilution protection for non-inherently distinctive marks Purporting to construe the language of the FTDA, the Second Circuit created an ill-advised bright line rule that only inherently distinctive marks are eligible for protection under the FTDA. 21 In its first decision establishing this rule, TCPIP Holding v. Haar Communications, the court probably reached the correct result in holding that the plaintiff’s mark in that case (THE CHILDRENS PLACE) does not qualify for dilution protection. 22 But the result is correct because that mark is almost certainly not famous and probably not sufficiently unique to warrant protection, not because descriptive marks categorically cannot qualify for FTDA protection. 23 The result in New York Stock Exchange v. New York, New York Hotel is much more dubious. The mark NEW YORK STOCK EXCHANGE seems like precisely the type of famous 24 See generally id. See N.Y. Stock Exch., Inc., v. N.Y., N.Y. Hotel, L.L.C., 293 F.3d 550, 556–67 (2d Cir. 2002); TCPIP Holding Co. v. Haar Commc’ns, Inc, 244 F.3d 88, 100 (2d Cir. 2001). 22 244 F.3d at 90, 96, 98. 23 Id. at 98. 24 The court acknowledged that “[a]ll would concede that NYSE is famous in the business world.” N.Y. Stock Exch., 293 F.3d at 552. 21 20 BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 1120 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. 16:1113 and unique mark that should potentially qualify for dilution protection. The Second Circuit was rightfully concerned that dilution statutes should not be construed so broadly as to grant exclusive rights in all areas of commerce in such common words as “American, National, Continental, Metropolitan, Pacific, Southern, Texas, Chicago, Federated, United, Consolidated, Allied, First National, Acme, Merit, and so forth.” 25 But the reason those marks should not receive dilution protection is because they are not famous and/or not unique. On the other hand, a mark may consist of a combination of terms that, although common or descriptive individually, combine to create a unique mark overall – e.g., AMERICAN AIRLINES, METROPOLITAN LIFE, and ALLIED CHEMICAL. 26 Although other uses of the individual terms AMERICAN, METROPOLITAN, and ALLIED would not likely dilute these famous marks, is there really any doubt that another’s use of the composite mark AMERICAN AIRLINES could potentially dilute that mark? As long as a mark meets the criteria of fame and uniqueness, it should not be automatically disqualified from dilution protection based merely on where it may fall on the spectrum of distinctiveness. Indeed, the Second Circuit’s position is contradicted by both the plain language and the legislative history of the FTDA. The statue itself expressly directs courts to consider “the degree of inherent or acquired distinctiveness” 27 in determining whether a mark qualifies for protection, necessarily contemplating that marks lacking inherent distinctiveness can become protectable against dilution. The legislative history confirms that this was Congress’s precise intent. Contrary to the Second Circuit’s statement that the three marks cited in the House Report accompanying the FTDA as possible beneficiaries of the Act (DUPONT, BUICK, and KODAK) are “all highly distinctive, arbitrary or fanciful,” 28 the mark DUPONT is a surname and thus TCPIP Holding, 244 F.3d at 96. See id. at 96, n.8. 27 15 U.S.C. § 1125(c)(1)(A) (2000) (emphasis added). 28 TCPIP Holding, 244 F.3d at 96 (citing H.R. REP. NO. 104-374, at 3 (1995), as reprinted in 1995 U.S.C.C.A.N. 1929, 1030). 26 25 BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 2006] FEDERAL DILUTION STATUTE 1121 is not inherently distinctive under the Lanham Act. 29 Congress laid to rest any possible doubts about its intent on this issue by stating in the very same House Report that “[t]he first factor makes it clear that a mark may be deemed ‘famous’ even if not inherently distinctive, that is, even if the mark is not arbitrary, fanciful, or coined.” 30 2. Niche fame doctrine Under classic dilution theory, marks that have achieved widespread fame and notoriety should be protected against other uses even if there is no likelihood of confusion or competition. Hypothetical examples of dilution oft-cited in judicial decisions and legislative history include DUPONT shoes, BUICK aspirin, KODAK pianos, SCHLITZ varnish, and BULOVA gowns. 31 The so-called “niche fame” doctrine basically turns this traditional view of dilution on its head. Under this doctrine, marks that are allegedly famous in a niche market (e.g., in a discrete industry or in a small geographic area) are protectable against dilution if the defendant is using the mark in the same niche.32 See 15 U.S.C. § 1052(e)(4), (f) (2000). H.R. REP. NO. 103-374, at 7 (1995), as reprinted in 1995 U.S.C.C.A.N. 1030, 1034; see also NASDAQ Stock Market Inc. v. Antarctica S.r.l., 69 U.S.P.Q.2d (BNA) 1718, 1736 n.30 (T.T.A.B. 2003) (proceeding “on the assumption that a mark with inherent or acquired distinctiveness may be protected under the dilution statute”); RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 25 cmt. e (1995) (“A descriptive mark may by extensive advertising and long exclusive use also acquire a sufficiently high degree of distinctiveness to justify protection against dilution.”). 31 See, e.g., Eli Lilly & Co. v. Natural Answers, Inc., 233 F.3d 456, 466 n.4 (7th Cir. 2000); Sally Gee, Inc. v. Myra Hogan, Inc., 699 F.2d 621, 625 (2d Cir. 1983), (citing 1954 N.Y. LEGIS. ANNUAL 49); H.R. REP. NO. 104-374, at 3 (1995), as reprinted in 1995 U.S.C.C.A.N. 1029, 1030. The Ninth Circuit offered up the following more modern hypothetical diluting uses: “Tylenol snowboards, Netscape sex shops, and Harry Potter dry cleaners.” Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894, 903 (9th Cir. 2002). 32 See, e.g., Times Mirror Magazines, Inc. v. Las Vegas Sports News, L.L.C., 212 F.3d 157 (3d Cir. 2000); Syndicate Sales, Inc. v. Hampshire Paper Corp., 192 F.3d 633 (7th Cir. 1999); N.Y. State Soc’y of Certified Pub. Accountants v. Eric Louis Assocs., Inc., 79 F. Supp. 2d 331 (S.D.N.Y. 1999). See also Avery Dennision Corp. v. Sumpton, 189 F.3d 868, 878 (9th Cir. 1999) (“specialized fame can be adequate only if the ‘diluting uses are directed narrowly at the same market segment,’” quoting Wash. Speakers Bureau, Inc. v. Leading Auths., Inc., 33 F. Supp. 2d 488, 503 (E.D. Va.1999)). 30 29 BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 1122 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. 16:1113 But, if the defendant is using the plaintiff’s famous mark (or a highly similar mark) in the very same niche as the plaintiff, traditional likelihood of confusion analysis should be sufficient. There is simply no need to resort to a dilution claim in those types of cases, and doing so significantly confuses and thus compromises the viability of the whole dilution doctrine. 33 3. Moseley v. V Secret The straw that broke the FTDA’s back and sparked efforts for legislative reform was the Supreme Court’s decision in Moseley. a) Actual dilution standard As discussed above, the FTDA proscribes conduct that “causes dilution” of the plaintiff’s famous mark. Prior to the Supreme Court’s Moseley decision, the courts split as to the meaning of this term. In Ringling Bros.-Barnum & Bailey Combined Shows, Inc. v. Utah Div. of Travel Dev., the Fourth Circuit held that this language requires the plaintiff to prove that the defendant’s use is the “effective cause” 34 of “actual economic harm to the famous mark’s economic value by lessening its former selling power as an advertising agent for [the plaintiff’s] goods or services.” 35 However, in Nabisco, Inc. v. PF Brands, Inc., the Second Circuit sharply disagreed with the Fourth Circuit’s interpretation of the FTDA as requiring proof of actual, consummated harm. 36 Instead, the Second Circuit held that the FTDA permits injunctive relief before any dilution actually occurs. 37 Other circuits subsequently joined in the debate, the Fifth Circuit siding with the Fourth in holding that the FTDA requires proof of actual dilution, 38 while See MCCARTHY, supra note 2, § 24:112.1 (“As a matter of public policy, the niche fame concept threatens to deform and displace the traditional likelihood of confusion rule . . .”) 34 170 F.3d 449, 458 (4th Cir. 1999). 35 170 F.3d at 458–61. 36 191 F.3d 208, 223 (2d Cir. 1999). 37 Id. at 224–25. 38 Westchester Media Co. v. PRL USA Holdings, Inc., 214 F.3d 658, 670–71 (5th Cir. 2000). 33 BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 2006] FEDERAL DILUTION STATUTE 1123 the Third and Sixth Circuits followed the Second in requiring only a likelihood of dilution. 39 Enter the Supreme Court. Resolving this circuit split, the Court held that the “causes dilution” text of the FTDA “unambiguously requires a showing of actual dilution, rather than a likelihood of dilution.” 40 The Court dismissed the plaintiffs’ and their amici’s cries that evidence of actual dilution may be difficult to obtain, stating, “Whatever difficulties of proof may be entailed, they are not an acceptable reason for dispensing with proof of an essential element of a statutory violation.” 41 Unfortunately, the Supreme Court’s Moseley decision essentially emasculates the FTDA. It will be virtually impossible in all but the rarest of cases for a plaintiff to be able to find or develop evidence that its mark has suffered any demonstrable “dilution” resulting from the defendant’s use. Such an effect is simply not normally detectable in the actual marketplace or through consumer surveys. Further, a requirement to show actual harm makes little sense for a statute whose primary remedy is injunctive (not monetary) relief. There is no indication that Congress intended such an absurd result that so radically departs from the longstanding “likelihood of dilution” standard under state statutes. b) Tarnishment Another problem with the FTDA raised in the Supreme Court’s Moseley decision is whether it covers dilution by tarnishment. Courts have historically recognized two different types of dilution: “blurring” and “tarnishment.” 42 “Tarnishment” arises where the defendant links the plaintiff’s mark to shoddy, unwholesome, or unsavory products 43 (e.g., where the mark is depicted in the Times Mirror Magazines, Inc. v. Las Vegas Sports News, L.L.C., 212 F.3d at 168– 69; V Secret Catalogue, Inc. v. Moseley, 259 F.3d 464, 476 (6th Cir. 2001), rev’d, 537 U.S. 418 (2003). 40 Moseley, 537 U.S. at 433. 41 Id. at 434. 42 Eli Lilly, 233 F.3d at 466. 43 Deere & Co. v. MTD Prods., Inc., 41 F.3d 39, 43 (2d Cir. 1994). 39 BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 1124 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. 16:1113 context of activity that is obscene 44 or illegal 45 ). “Blurring” typically refers to the concept of “whittling away an established trademark’s selling power through its unauthorized use . . . [on] dissimilar products.” 46 Tarnishment is generally considered to fall under the “injury to business reputation” prong of state dilution statutes, while blurring is considered to be covered by the “dilution of the distinctive quality” language.47 It is uncertain whether the FTDA covers tarnishment. In the Trademark Review Commission’s 1987 report recommending that a new dilution provision (Section 43(c)) be added to the Lanham Act (a recommendation that largely parallels the FTDA 48 ), the Commission also proposed that a separate provision be added to Section 43(a) (not Section 43(c)) to deal with disparagement and tarnishment. 49 The Commission stated that “trademark tarnishment and disparagement are a separate form of legal wrong” 50 that are “unrelated to the classical Schechter concept of Although the legislative history indicates that dilution.” 51 Congress intended to encompass tarnishment when it enacted the FTDA, 52 the FTDA as passed did not include the Trademark 44 E.g., Dallas Cowboys Cheerleaders, Inc. v. Pussycat Cinema, Ltd., 604 F.2d 200, 202–03 (2d Cir. 1979) (applying New York dilution statute to preliminarily enjoin pornographic movie featuring Dallas Cowboys Cheerleaders uniforms). 45 E.g., Coca-Cola Co. v. Gemini Rising, Inc., 346 F. Supp. 1183, 1186–87, 1191–93 (E.D.N.Y. 1972) (applying New York dilution statute to preliminarily enjoin posters displaying the slogan “Enjoy Cocaine” in design simulating “Enjoy Coca-Cola” logo). 46 Deere, 41 F.3d at 43. 47 See Moseley, 537 U.S. at 432; Accuride Int’l, Inc. v. Accuride Corp., 871 F.2d 1531, 1538 (9th Cir. 1989); RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 25 cmts. e–g (1995) 48 See The United States Trademark Association Trademark Review Commission Report and Recommendations to USTA President and Board of Directors, 77 TRADEMARK REP. 375, 458–59 (Sep.-Oct. 1987). 49 Id. at 435. 50 Id. at 455, n.134. 51 Id. at 455; accord Ringling Bros.-Barnum & Bailey Combined Shows, Inc. v. Utah Div. of Travel Dev., 170 F.3d 449, 452 n.1 (4th Cir. 1999) (noting “the difficult question of how conceptually to fit tarnishment within a theory of dilution”). 52 See, e.g., H.R. REP. NO. 104-374 at 2 (1995) as reprinted in 1996 U.S.C.C.A.N. 1029, 1029 (“[T]he purpose of [the FTDA], is to protect famous trademarks from subsequent uses that blur the distinctiveness of the mark or tarnish or disparage it.”); 141 CONG. REC. § 19,310 (1995) (statement of Sen. Hatch) (“Mr. President, [the FTDA] is BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 2006] FEDERAL DILUTION STATUTE 1125 Review Commission’s proposed amendment to Section 43(a). Nor did it incorporate into Section 43(c) the “injury to business reputation” language from the state statutes. In the Moseley decision, the Supreme Court noted this difference between the FTDA and state dilution statutes and questioned whether the FTDA therefore embraces tarnishment. 53 III. H.R. 683 A. Key Features The Supreme Court’s Moseley decision made it painfully clear to the trademark community that the FTDA needs to be fixed. Shortly after the decision, the International Trademark Association (INTA) assembled a “blue ribbon” panel of trademark experts to study the statute and recommend changes. The result was H.R. 683. This bill was introduced on February 9, 2005, by Rep. Lamar Smith of Texas, Chairman of the House Subcommittee on Courts, the Internet, and Intellectual Property, Committee on the Judiciary (“House IP Subcommittee”). 54 The bill (as amended in committee) was overwhelmingly passed by the House of Representatives (411-8) on April 19, 2005. 55 It was amended again and approved by the Senate Judiciary Committee on February 16, 2006, and unanimously passed by the Senate on March 8, 2006. The bill is currently awaiting action again in the House. 56 H.R. 683 attempts to address many of the problems with the FTDA discussed above. designed to protect famous trademarks from subsequent uses that blur . . . or tarnish or disparage it.”). 53 See V Secret Catalogue, Inc. v. Moseley, 537 U.S. 418, 432 (2003). 54 H.R. 683, 109th Cong. (2005); H.R. REP. NO. 109-23 (2005). 55 Congressional Actions—H.R. 683, 109th Cong. (2005), available at http://thomas.loc.gov (last visited May 10, 2006). 56 Id. BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 1126 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. 16:1113 1. Likelihood of dilution standard First and foremost, H.R. 683 would abrogate the FTDA’s dreaded actual dilution standard. Specifically, subsection 43(c)(1) of the bill states: Subject to the principles of equity, the owner of a famous mark that is distinctive, inherently or through acquired distinctiveness, shall be entitled to an injunction against another person who, at any time after the owner’s mark has become famous, commences use of a mark or trade name in commerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark, regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury. 57 2. Dilution protection for non-inherently distinctive marks H.R. 683 would also overrule the Second Circuit’s rule that categorically denies dilution protection to non-inherently distinctive marks. 58 As stated in subsection 43(c)(1) (quoted above), owners of famous marks that are “distinctive, inherently or through acquired distinctiveness” (emphasis added) are eligible for protection. 59 3. Tarnishment Third, subsection 43(c)(1) would clarify that both “dilution by blurring” and “dilution by tarnishment” are covered. 60 Subsection 43(c)(2)(C) goes on to define “dilution by tarnishment” as “association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark.” 61 Although this definition sounds awfully broad, the bill addresses this concern by carving out an exclusion for fair use of 57 H.R. 683, 109th Cong. § 43(c)(1) (2005) (emphasis added); H.R. REP NO. 109-23 (2005). 58 See discussion supra Part II.B.1. 59 H.R. 683, 109th Cong. § 43(c)(2)(A) (2005); H.R. REP. NO. 109-23 (2005). 60 Id. 61 Id. § 43(c)(2)(C) BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 2006] FEDERAL DILUTION STATUTE 1127 the plaintiff’s mark to parody, criticize, or comment upon the plaintiff or its goods and services. 62 4. Abolition of niche fame doctrine Fourth, subsection 43(c)(2)(A) would effectively abolish the niche fame doctrine by defining a mark as “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.” 63 5. Simplification of fame factors Finally, subsection 43(c)(2)(A) would simplify the factors courts should consider in determining whether a mark is “famous,” in essence trimming the cumbersome list of factors in the FTDA as follows: In determining whether a mark possesses the requisite degree of recognition, the court may consider all relevant factors, including 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. (iii) The extent of actual recognition of the mark. 64 This provision is well drafted and properly focuses on those factors most probative of fame. See discussion infra Part III.B.3. H.R. Res 683, 109th Cong. (2005); H.R. REP. NO. 109-23 (2005). 64 Id. The Senate Judiciary Committee added the following factor: “(iv) Whether the mark was registered under the Act of March 3, 1881, or the Act of February 20, 1905, or on the principal register.” This is identical to the eighth factor in the FTDA, 15 U.S.C. § 1125(c)(1)(H) (2000). 63 62 BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 1128 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. 16:1113 B. Concerns with H.R. 683 1. “Designation of source” requirement When originally introduced, subsection 43(c)(1) of H.R. 683 included a requirement that, to be actionable, the defendant must use the allegedly diluting mark or trade name “as a designation of source of the person’s goods or services.” At a hearing on the bill, the American Intellectual Property Law Association (AIPLA) opposed this requirement on a number of grounds. 65 First, this “designation of source” requirement was severely overbroad and completely unnecessary. 66 This limitation was apparently 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 problems. 67 However, courts have generally held that descriptive and nominative fair uses are not actionable under the FTDA, and have had no difficulty reconciling the FTDA with protection of First Amendment rights. 68 In addition, fair use defenses and First Amendment issues are more appropriately addressed in the exclusions subsection of the bill. The “designation of source” requirement would have removed from the bill’s ambit at least three types of uses that have traditionally been held subject to dilution relief: (a) domain name uses that do not fall under the Anti-Cybersquatting Consumer Protection Act (“ACPA”); (b) tarnishing uses that do not designate the source of the tarnisher’s goods or services; and (c) generic misuses. 69 See “Statement of William G. Barber on behalf of the American Intellectual Property Law Association before the Subcommittee on Courts, the Internet and Intellectual Property, Committee on the Judiciary, United States House of Representatives, on the Trademark Dilution Revision Act of 2005 (H.R. 683),” Feb. 17, 2005, available at http://judiciary.house.gov/Hearings.aspx?ID=81. 66 Id. at 3. 67 Id. 68 See id., at 3–4. 69 Id. at 4–9. 65 BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 2006] FEDERAL DILUTION STATUTE 1129 a) Domain names The ACPA, 15 U.S.C. § 1125(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 or dilutive of a famous mark. 70 While the ACPA has proven to be a potent weapon against cybersquatters, a substantial number of domain name cases remain where there is no bad faith or it cannot be proven, but there is still likelihood of confusion or dilution warranting relief. 71 The proposed “designation of source” requirement arguably would have precluded a dilution claim in many of these situations unless the defendant was using the domain name to designate the source of its own goods or services. b) Tarnishing uses The “designation of source” limitation would also have precluded tarnishment claims where a defendant’s commercial use is not as a designation of source for its goods or services. This would have eliminated 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 finding that plaintiff’s mark will suffer negative associations through defendant’s use.” 72 Although uses that are noncommercial or First Amendment-protected commentary or criticism have generally been held not to create tarnishment See, e.g., Sporty’s Farm L.L.C. v. Sportsman’s Mkt., Inc., 202 F.3d 489 (2d Cir. 2000) (holding that plaintiff violated the ACPA in claiming the sportys.com domain name in bad faith to promote its Christmas tree business having full knowledge that Sportsman promoted its catalogues selling aviation goods and accessories under the name “Sporty’s”). 71 See, e.g., PACCAR Inc. v. TeleScan Techs., L.L.C., 319 F.3d 243 (6th Cir. 2003) (finding a likelihood of confusion based on defendant’s incorporation of plaintiff’s “Peterbilt” and “Kenworth” trademarks into domain names for websites providing truck locator services); Harrods Ltd. v. Sixty Internet Domain Names, 302 F.3d 214, 224 (4th Cir. 2002) (holding that plaintiff in ACPA in rem action “may, in appropriate circumstances, pursue infringement and dilution claims as well as bad faith registration claims”). 72 Hormel Foods Corp. v. Jim Henson Prods., Inc., 73 F.3d 497, 507 (2d Cir. 1996). 70 BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 1130 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. 16:1113 liability, 73 commercial uses that cross the line and cause damage to the plaintiff’s mark have been held actionable under dilution statutes. 74 In Deere & Company v. MTD Products, Inc., a competitor of Deere was found to have deliberately sought to damage consumer associations with Deere’s famous “Deere Logo” in a television commercial. 75 The court found that MTD animated Deere’s logo and showed it as a tiny fleeing deer being terrorized by a little dog and the defendant’s Yardman lawn tractor. 76 In granting dilution relief, the Second Circuit observed that: [S]ome 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. 77 It noted in particular that MTD was still free to run comparative advertisements, stating that, “MTD remains free to deliver its message of alleged product superiority without altering and thereby diluting Deere’s trademarks.” 78 If the proposed See, e.g., TMI, Inc. v. Maxwell, 368 F.3d 433, 436–40 (5th Cir. 2004) (“noncommercial gripe site” criticizing trademark owner did not violate the FTDA or the Texas dilution statute); L.L. Bean, Inc. v. Drake Publishers, Inc., 811 F.2d 26, 27, 32–33 (1st Cir. 1987) (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). 74 Anheuser-Busch, Inc. v. Balducci Publ’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, Ltd., 604 F.2d 200 (2d Cir. 1979); Coca-Cola Co. v. Gemini Rising, Inc., 346 F. Supp. 1183, 1189 n.7 (E.D.N.Y. 1972). 75 41 F.3d 39, 39 (2d Cir. 1994). 76 Id. at 41. 77 Id. at 45. 78 Id. 73 BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 2006] FEDERAL DILUTION STATUTE 1131 “designation of source” requirement had been accepted, it would have eliminated the ability under the FTDA to stop this type of activity. c) Generic misuses A third important type of use for which the proposed “designation of source” limitation would have eliminated 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 mark being used to refer to a type of product rather than a brand. Examples where rights have been lost include aspirin (even though it is 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 suing those who make commercial generic misuse. As explained in Illinois High School Association v. GTE Vantage, Inc., “[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.” 79 As in E.I. DuPont de Nemours and Company v. Yoshida International, Inc., those efforts typically include “extensive surveillance by [the owner’s] legal and advertising departments,” with misuses promptly responded to. 80 Where the commercial use is sufficiently damaging, legal action may prove necessary. 81 There can be no doubt that generic misuses diminish the distinctiveness and impair the association of a famous mark with a single source. But they do not designate the source of the defendant’s goods or services. Again, noncommercial misuses are 99 F.3d 244, 246 (7th Cir. 1996). 393 F. Supp. 502, 507 (E.D.N.Y. 1975). 81 See, e.g., Selchow & Righter Co. v. McGraw-Hill Book Co., 580 F.2d 25, 27 (2d Cir. 1978) (granting 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). 80 79 BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 1132 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. 16:1113 not actionable under the FTDA, but generic uses in a commercial context should be. 82 The proposed “designation of source” limitation therefore would have deprived trademark owners of the best and perhaps only legal remedy they have against such commercial misuses. d) Other problems The proposed “designation of source” requirement would have created other problems as well. It would have in essence shifted 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, but this proposal would have required the plaintiff in a dilution case to prove that defendant is using a term as a mark. 83 Moreover, unlike “trade name” or “mark,” the phrase “designation of source” is nowhere defined in the statute. The inclusion of such an undefined term would have only led to further confusion in the bill’s application. Finally, it would have created 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. 84 Just as a nontrademark 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. Fortunately, this part of the story has a happy ending. The objectionable language “as a designation of source of the person’s goods or services” was removed in the House Judiciary Committee’s mark-up of H.R. 683, substantially strengthening the bill and providing a huge win to trademark owners. 2. Definition and factors for “dilution by blurring” The other major concern raised by AIPLA at the House IP Subcommittee hearing related to subsection 43(c)(2)(B) of H.R. 82 83 84 RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 25 cmt. i (1995). See, e.g., 15 U.S.C. §§ 1114(1), 1125(a) (2000). See, e.g., id. BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 2006] FEDERAL DILUTION STATUTE 1133 683, which defines “dilution by blurring” as “association” between the parties’ marks that impairs the “distinctiveness” of the famous mark, and provides a list of factors for determining dilution by blurring. 85 To put AIPLA’s concerns regarding this provision into proper context, it is important to first review the historical underpinnings of the dilution 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.” 86 Professor Schechter observed that the selling power of a mark depends largely on its “uniqueness and singularity,” 87 and therefore “the preservation of the uniqueness or individuality of the trademark is of paramount importance to its owner.” 88 Marks that are “actually unique and different from other marks” 89 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. 90 He concluded that “the 85 86 87 88 89 90 The full text of this provision reads: For purposes of paragraph (1), ‘dilution by blurring’ is association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark. In determining whether a mark or trade name is likely to cause dilution by blurring, the court may consider all relevant factors, including the following: (i) The degree of similarity between the mark or trade name and the famous mark. (ii) The degree of inherent or acquired distinctiveness of the famous mark. (iii) The extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark. (iv) The degree of recognition of the famous mark. (v) Whether the user of the mark or trade name intended to create an association with the famous mark. (vi) Any actual association between the mark or trade name and the famous mark. 40 HARV. L. REV. 813 (1926–1927). Id. at 831. Id. at 822. Id. at 831. Id. at 830. BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 1134 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. 16:1113 preservation of the uniqueness of a trademark should constitute the only rational basis for its protection.” 91 Professor Schechter offered several examples of marks appropriate for this type of protection, including ROLLS-ROYCE, AUNT JEMIMA’S, KODAK, and RITZ-CARLTON. 92 Similarly, the legislative history of the FTDA provides the following classic examples of diluting marks: DUPONT shoes, BUICK aspirin, and KODAK pianos. 93 Other examples that have been cited in the case law include SCHLITZ varnish, BULOVA gowns, TYLENOL snowboards, NETSCAPE sex shops, and HARRY POTTER dry cleaners. 94 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. The primary problem with subsection 43(c)(2)(B) is that it defines “dilution by blurring” in terms of impairment of a mark’s “distinctiveness.” “Distinctiveness” is a well-established term of art in trademark law, 95 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.”96 This creates a confusing ambiguity in the bill: does “distinctiveness” as used in the definition of dilution by blurring mean this traditional distinctiveness, or does it mean something else? Id. at 831. Id. 93 H.R. REP. NO. 104-374, at 3 (1995), as reprinted in 1995 U.S.C.C.A.N. 1029, 1030. 94 See, e.g., Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894, 903 (9th Cir. 2002); Eli Lilly & Co. v. Natural Answers, Inc., 233 F.3d 456, 466 n.4 (7th Cir. 2000); Sally Gee, Inc. v. Myra Hogan, Inc., 699 F.2d 621, 625 (2d Cir. 1983). 95 Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208, 215 (2d Cir. 1999). 96 Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769 (1992). 92 91 BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 2006] FEDERAL DILUTION STATUTE 1135 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. 97 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. 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. The mark APPLE is also used by others in connection with records, banks, leasing services, and many other businesses. 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 lead to the opposite result due to the APPLE mark’s high degree of inherent distinctiveness. 97 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. BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 1136 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. 16:1113 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 1964 MSTB and early state dilution statutes spoke in terms of “dilution of the distinctive quality” of a mark. Use of this same phrase was then carried forward into the FTDA. 98 This language has long befuddled courts and created significant concerns about the dilution doctrine in general. 99 The struggle to properly understand and apply dilution statutes continues today. Professor McCarthy (perhaps the leading commentator in the trademark field) states, “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.” 100 Rather than remedy the longstanding 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 advocated amending H.R. 683 to remove the trademark term of art “distinctive(ness)” from the statutory definition 101 and provide courts with much needed guidance on determining “dilution by blurring.” 15 U.S.C. § 1125(c)(1) (2000). 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 unelaborated reference to ‘dilution of the distinctive quality of a mark’”). 100 J.T. McCarthy, Proving a Trademark Has Been Diluted: Theories or Facts?, 41 Houston L. Rev. 713, 726 (2004). 101 Accord David J. Kera and Theodore H. Davis, Jr., A. United States The Fifty-Fifth Year of Administration of the Lanham Trademark Act of 1946, 93 TRADEMARK REP. 197, 202 (2003). 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. 99 98 BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 2006] FEDERAL DILUTION STATUTE 1137 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.” 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.” In early 2005, AIPLA hosted a meeting with other interested intellectual property law associations to discuss the bill. In these discussions, concerns were raised as to whether courts would understand and properly apply the term “substantially unique.” 102 Although AIPLA did not share those concerns, it suggested the following definition and factors as one possible way of resolving them: “[D]ilution by blurring” means impairment of the association between the famous mark and a single source. In determining whether use of a mark or trade name is likely to cause dilution by blurring, the court may consider all relevant factors, including but not limited to the following: (i) The strength of the association between the famous mark and a single source. (ii) The degree of recognition of the famous mark. (iii) The degree of inherent or acquired distinctiveness of the famous mark. 102 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.” See “Statement of William G. Barber on behalf of the American Intellectual Property Law Association before the Subcommittee on Courts, the Internet and Intellectual Property, Committee on the Judiciary, United States House of Representatives, on the Trademark Dilution Revision Act of 2005 (H.R. 683),” Feb. 17, 2005, available at http://judiciary.house.gov/media/pdfs/barber021705.pdf (last visited Sept. 2, 2006). BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 1138 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. 16:1113 (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. (v) Whether the user of the mark or trade name intended to impair the association between the famous mark and a single source. (vi) Any actual impairment of the association between the famous mark and a single source. 103 AIPLA argued that this proposal would properly focus courts on the impairment of consumers’ association between the famous mark and a single source (as opposed to the mark’s “distinctiveness”), and provide a list of appropriate factors relevant to determine the likelihood of dilution by blurring. 104 For better or worse, the “impairment of distinctiveness” language remains in the bill. 105 Fortunately, however, the factors listed for determining “dilution by blurring” do at least emphasize the concept of uniqueness by directing courts to consider “[t]he extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark.” 106 3. First Amendment concerns When H.R. 683 was first introduced, the American Civil Liberties Union (“ACLU”) voiced concern that expressly adopting a “likelihood” of “dilution by tarnishment” standard might be used by trademark owners to impinge upon free speech rights, e.g., by precluding such uses as the anti-smoking campaign appearing in Adbusters magazine featuring “Joe Chemo,” a parody of Camel Cigarette’s familiar character Joe Camel. 107 Although the original 103 104 See id. See id. 105 See Trademark Dilution Revision Act of 2005, H.R. 683, 109th Cong. § 43(c)(2)(B) (March 8, 2006) [hereinafter H.R. 683 (as amended 02/16/06)]. 106 H.R. 683 § 43(c)(2)(B). 107 See generally American Civil Liberties Union Testimony at a Hearing on H.R. 683, “The Trademark Dilution Revision Act of 2005” Before the Subcommittee on Courts, the BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 2006] FEDERAL DILUTION STATUTE 1139 version of H.R. 683 excluded “[n]oncommercial use” of a mark, 108 the ACLU was concerned that this exclusion might not provide sufficient protection, e.g., if campaign promoters sold T-shirts displaying Joe Chemo, posted the character on a website soliciting donations, or used it in other arguably “commercial” contexts. In response to these concerns, the AIPLA, INTA, and ACLU negotiated the following exclusion that was substituted into H.R. 683 by the House IP Subcommittee: Fair use of a famous mark by another person, other than as a designation of source for the person’s goods or services, including for purposes of identifying and parodying, criticizing or commenting upon the famous mark owner or the goods or services of the famous mark owner. 109 The Senate Judiciary Committee’s version of the bill retains this exclusion in a slightly modified form, 110 and also adds the exclusion for “noncommercial use” back into the bill.111 In addition, the bill carries forward from the FTDA 112 the exclusion for “[a]ll forms of news reporting and news commentary.” 113 These exclusions should alleviate most (if not all) legitimate First Amendment concerns. Internet, and Intellectual Property of the Committee of the Judiciary of the House of Representatives, 109th Cong. 4-6 (2005), available at http://judiciary.house.gov/ Hearings.aspx?ID=81. 108 See Trademark Dilution Revision Act of 2005, H.R. 683, 109th Cong. § 43(c)(3)(B) (Feb. 9, 2005) [hereinafter H.R. 683 (original)]. The FTDA includes a similar exclusion. See 15 U.S.C. § 1125(c)(4)(B) (2000). 109 Trademark Dilution Revision Act of 2005, H.R. 683, 109th Cong. § 43(c)(3)(B) (Apr. 19, 2005) [hereinafter H.R. 683 (as amended 04/19/05)]. 110 The text now reads: Any fair use . . . of a famous mark by another person other than as a designation of source for the person’s own goods or services, including use in connection with . . . identifying and parodying, criticizing, or commenting upon the famous mark owner or the goods or services of the famous mark owner. H.R. 683 (as amended 02/16/06), § 43(c)(3)(A)(ii). 111 H.R. 683 (as amended 02/16/06), § 43(c)(3)(C). 112 See 15 U.S.C. § 1125(c)(4)(C) (2000). 113 H.R. 683 (as amended 02/16/06), § 43(c)(3)(B). BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 1140 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. 16:1113 4. Tech company concerns A few other groups have raised concerns with H.R. 683 on the Senate side. For example, a group of Internet service providers and other web-based companies expressed concern that the bill might further proliferate lawsuits by trademark owners seeking to prevent Internet search engines from selling trademarked terms as keywords to generate sponsored links or comparative advertisements. They also expressed concern about possible liability if a famous mark is displayed when selling or reselling a branded product on a website such as eBay. The tech companies originally proposed a new exclusion that would have made those types of activities a per se fair use provided they met certain criteria. INTA and AIPLA were concerned that this proposal went too far, and the groups negotiated the following amended exclusion: Any fair use, including a nominative or descriptive fair use, or facilitation of such fair use, of a famous mark by another person other than as a designation of source for the person’s own goods or services, including use in connection with . . . advertising or promotion that permits consumers to compare goods or services . . . . 114 This revised language addresses the concerns raised by the tech companies in two key ways. First, it explicitly covers facilitation of fair comparative advertising, thus potentially protecting search engines who sell trademarked keywords to advertisers, so long as the link or ad generated by the keyword uses the mark fairly. Second it explicitly covers nominative fair use, 115 in addition to traditional descriptive fair use. The groups also agreed upon some proposed legislative history clarifying that the sale or resale of genuine goods does not generally constitute dilution, and clarifying that the exclusions listed in H.R. 683 are not intended to have any effect on fair use defenses to infringement claims. H.R. 683 (as amended 02/16/06), § 43(c)(3)(A)(i). “Nominative fair use” is the term commonly used to refer to use of the plaintiff’s mark to refer to the plaintiff itself or the plaintiff’s goods or services. 115 114 BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 2006] FEDERAL DILUTION STATUTE 1141 5. Trade dress Certain discount retailers—who are sometimes accused of selling cheap, inferior quality knock-offs of major brand products—also raised concerns about how the new dilution bill might impact their exposure in such cases. They originally proposed a series of alternative amendments attempting to shield them from liability for dilution, ranging from: (a) completely excluding trade dress claims from the bill; (b) excluding dilution claims based on product configuration; or (c) preventing tarnishment claims based on product configuration against competing products. Needless to say, several IP bar organizations opposed these amendments. As a compromise, the Senate Judiciary Committee amended H.R. 683 to provide that where the trade dress asserted in a dilution action is not registered on the principal register, the plaintiff must prove that “the claimed trade dress, taken as a whole, is not functional and is famous . . . .” 116 In addition, if the unregistered trade dress includes any mark(s) registered on the principal register, the plaintiff will have to prove that “the unregistered matter, taken as a whole, is famous separate and apart from any fame of such registered marks.” 117 In addition, the bill now includes a “savings clause” stating that nothing therein “shall be construed to impair, modify, or supersede the applicability of the patent laws of the United States.” 118 IV. CONCLUSION Although far from perfect, H.R. 683 represents a vast improvement over the FTDA and should be enacted promptly. The Supreme Court’s Moseley decision has left trademark owners with a federal dilution statute that is virtually impossible to enforce, relegating them once again to poorly defined dilution protection under state statutes and foreclosing the promise of national uniformity. H.R. 683 would restore the likelihood of 116 117 118 H.R. 683 (as amended 2/16/06), § 43(c)(4)(A). H.R. 683 (as amended 2/16/06), § 43(c)(4)(B). H.R. 683 (as amended 2/16/06), § 43(c)(7). BARBER_PAPER_091706_CLEAN 9/17/2006 5:55:10 PM 1142 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. 16:1113 dilution standard and provide other improvements and clarifications to better guide courts through this most difficult area of the law.