Trademark Dilution Revision Act Becomes Law

[UPDATE: Good additional commentary from law professor Eric Goldman is here.]

In the end-of-session rush, while many observers interested in Info/Law were paying attention to a proposed copyright bill that ultimately died in committee, Congress did pass a significant trademark bill with relatively little notice. President Bush signed the Trademark Dilution Revision Act into law on Friday.

Congress added trademark dilution as a cause of action under federal law in 1996. Unlike traditional trademark infringement scenarios, in which the injury is the likelihood of confusion among consumers, dilution recognizes the potential injury to a trademark in cases where there is no such confusion, perhaps because the products are dissimilar or the circumstances make a traditional claim untenable. The classic law-school example is to suggest that if someone started selling KODAK bicycles, it would injure the vitality of the KODAK trademark by “blurring” its distinctiveness — even if there were no evidence that any consumers actually thought those bikes came from the film people. In such a case, there would be a claim for trademark dilution.

The main effect of the new law is to overturn a 2003 Supreme Court decision involving a little store selling “adult novelties” in a Louisville, Kentucky strip mall called “Victor’s Little Secret.” A certain large national retailer that does not like to think of itself in such shabby terms sued for trademark dilution. The Court held that the plaintiff needed to prove, not merely likelihood of dilution, but actual dilution. This is so difficult to accomplish in practice that many considered the federal cause of action dead– until now, that is. The new law revises the statute to make it clear that plaintiff need only show defendant’s mark is likely to cause dilution of plaintiff’s mark.

That change should reanimate debate about the advisability of recognizing trademark dilution. The dilution concept has long been criticized for separating a trademark claim from its conceptual moorings: in theory, the principal interest protected by trademark law has been to prevent consumers from being confused. But that theory has been highly attenuated for a long time, so maybe it is better to admit that trademark law now protects big companies’ brand names for their own sake. In addition, many states already provided a cause of action for likely dilution, so federal trademark lawsuits have routinely joined state-law dilution claims anyway. And finally, the quick passage of the new law probably indicates that, in reality, federal trademark dilution law is here to stay.

The new law makes two other changes that are potentially more troubling.

First, as I blogged back in May, the new law alters language that could have been interpreted to extend common-sense codified fair use defenses to many trademark cases. The 1996 dilution statute listed such defenses (such as comparative advertising, news reporting, and noncommercial use) as applicable to actions brought under “this section,” which might be read to apply not just to dilution claims but to many other cases under Section 43 of the Lanham Act. The new law retains those fair use defenses (thank goodness) but limits them to cases under “this subsection” — that is, to dilution cases. This strikes me as a lost opportunity to rationalize trademark fair use doctrine across the board, a longstanding interest of mine.

Second, the new law now adds “dilution by tarnishment” as a cause of action, defined as “association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark.” This could be worse: the fair use defenses that stayed in the law reduce the danger that this language can be misused against legitimate criticism or comparisons. Still, I have reservations about any law that outlaws speech on the basis that it “harms the reputation” of something “famous.” The development of the stringent “actual malice” standard in libel law demonstrates the importance of narrowing restrictions on such speech. We will just have to see how well the fair use exceptions work in practice to avoid potential chilling effects.

8 Responses to “Trademark Dilution Revision Act Becomes Law”

  1. No stunner that the fair use clarification passed – I recall commenting on your post in May that it was hard to see the intention any other way, despite the poor drafting.

    Was there any real debate about that provision in Congress? That would be interesting to know.

  2. There was discussion “behind the scenes” about the section/subsection issue, but very little discussion of any kind on the record. Congressman David Wu opposed passage of the bill and inserted a statement into the Congressional Record, but on much more sweeping “trademarks have got out of control” grounds.

  3. Trademark Dilution Act…

    The Trademark Dilution Act was signed into lawMoseley v. V. Secret Catalogue, Inc. that in order to prevail on a trademark dilution claim, the plaintiff must establish the existence of actual dilution, not simply the likelihood of dilution. But the……

  4. Given the existence of the new Trademark Dilution Revision Act, would a website such as XYZ Sucks or XYZ Complaints create a major problem for a person who owns and manages such sites if XYZ is the trademarked name of a famous company?

  5. Moreover, I guess all those Boston Vendors will have to stop selling “Yankees Suck” t-shirts.

  6. I wish the anti-Yankees shirts could be stopped, but certainly I also hope that this law is not the avenue for doing it. (I was thinking more about Boston fans getting the chip off their shoulders!)

    In fact, I am pretty optimistic that the fair use provision in the law would help those who employ a mark solely in the context of critique or comment, rather than as an identifier for their own goods. The new law’s exceptions for such uses include:

    • “advertising or promotion that permits consumers to compare goods or services[.]“
    • “identifying and parodying, criticizing, or commenting upon the famous mark owner or the goods
      or services of the famous mark owner.”
    • “All forms of news reporting and news commentary”
    • “Any noncommercial use of a mark.”

    That ought to cover most such uses. But I have trouble relaxing when it comes to the murky world of trademark fair use. In particular, the undefined nature of “noncommercial use” is troubling — what about a blogger or critic who sells ads or T-shirts? Still, the “identifying and parodying, criticizing, or commenting upon” language ought to be enough. I hope…

    Also note that this revision makes doubly sure, as I said in the main post above, that the exceptions do not apply to claims other than dilution.

  7. [...] It seems obvious that there ought to be a single doctrine within federal trademark law that covers such cases, and that resort to constitutional defenses should be unnecessary. But there isn’t any such clear guidance about what rules cover the “fair use/parody” type of defense. In infringement cases, the statute provides only limited protection for use of trademarked terms in their English-language descriptive sense — not the situation here. There are exclusions for certain types of fair uses under the newly revised federal law on trademark dilution, but it is not even crystal-clear that this situation falls within those exclusions either. So counsel for the Aggie fans (led by an important partner at a major Texas law firm) are left with an uncertain legal landscape. This is one of the big doctrinal problems in trademark law. [...]

  8. I know it can be time-consuming to update your blog but thank you for keeping me informed and entertained!