[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.
Filed under: Trademarks