Understanding the Laws on Trademark Dilution

The toughest decision that we face in our day-to-day life is on deciding which place to dine-in or purchase goods or services from. We tend to base our decisions by comparing different kinds of brands available in the market that tends to offer with similar kind of services. Thus, in a competitive world such as this it is obvious that one desires to standout from others and be identified for something that makes them unique; it’s something that everyone strives in day to day life, starting from being distinct as a person to being marked uniquely in any business. Hence, the concept of trademark has gradually evolved to make its way into the legislations covering the intellectual property rights (intellectual property rights also known as IP, can be defined as a property that includes the intangible creation of the human beings), all across the globe. 

In layman’s terms, the word trademark can be defined as any recognizable sign, design, word, name or anything which can be used to identify any product or service of a particular origin from those of others. Did you know that the blacksmiths of the Roman Empire who made swords are observed to be the first users of the trademarks (as reported in Trademark Treaties)? Tracing back to the time, the oldest and long used notable trademarks include Stella Artois, which claims to use the mark since 1366, and Löwenbräu, which claims the use of its lion mark since 1383.  Over the span of years, the concept of trademark has expanded all across the globe to a great extent, calling for strong legislation in protecting the registered trademarks from being stolen or used in a deceptive manner, causing loss or damage to the original trademark owner.

This article will shed knowledge on the concept of ‘Trademark Dilution’ with reference to three countries (United States, United Kingdom, and India)

Did you know that the concept of dilution is known to have originated in Germany in a case regarding the mark ‘Odel’ for mouthwashes, prohibiting the use of identical marks for the steel products by other companies? The court recognizing the concept of dilution held that ‘the plaintiff’s ability to compete with other manufacturers of mouthwashes will be damaged if the significance of the mark is lessened and also the court acknowledged the fact that it is immoral to trade upon the reputation of a famous mark on the supposition that the consumer who sees or hears the mark is prone to immediately associate the goods with the products for which the mark has become famous. But on the contrary, some people believe that the doctrine of dilution has first recognized in the case Eastman Co. v. Kodak Cycle Co., 15 Reports Patent Cases 105 (1898), Eastman companies are the manufacturers of Kodak cameras. They filed a suit against Kodak cycle company for using the kodak mark on their bicycles. The verdict was held in favor of the plaintiff for the reasons that using of the same mark as the plaintiffs can cause confusion among the consumers. Thus, the concern to protect the uniqueness of the mark has been there for a long time.

The doctrine of dilution is a trademark law concept that allows the owner of a famous trademark to restrict others from using that mark in a manner that would affect or lessen its uniqueness. What makes the concept of dilution different from any other trademark infringement is that it gives the right to the owner of a famous trademark to forbid others from using his trademark by approaching Intellectual property lawyers, even in the absence of any kind of competition (non-competitive markets) or dissimilar goods. For instance, a famous trademark used by one company to refer to electronics-related products might be diluted if another company uses a similar mark for cosmetic products.

Trademark dilution can be defined as the destruction of a trademark’s strength or distinctiveness, caused by the use of the mark on an unrelated product. Dilution usually happens either in the form of blurring the trademark’s distinctive character or tarnishing it with an unsavory association.

Trademark Dilution in United States

In the United States, the first attempt to establish a federal trademark regime in 1870, was initiated by Congress while exercising their copyright clause powers. However, it couldn’t sustain more than a decade and the Supreme Court had to struck down this act. Again, the Congress has passed a legislation on trademark in 1881 in pursuant of their commerce clause powers and this act was revised again in 1905. But with the time, the Congress recognized there was a growing need for a more comprehensive law on trademark, paving way for the enactment of the Lanham (Trademark) Act of 1946, which was thoroughly revised and updated to act as the primary federal law on trademarks (the Lanham Act).

Until 1996, the disputes concerning the trademark dilution in the United States of America (USA) was governed by the Lanham Act of 1946. Section 43 of Lanham Act lays down a civil liability on any person found using any known distinctive mark in a manner to falsely represent it leading to confusion and deception, or represents in a manner misleading the facts on any goods or services. However, the Lanham Act failed to meet the aspects of the trademark dilution disputes efficiently and with the growing globalization the threat of resting on the fame of the well-known and popular trademark owners increased. Thus, calling for a more specific legislation on trademark dilution. Due to absence of specific law which dealt with dilution, many states in the United States adopted their own statutes on dilution and the first state to pass an anti-dilution act was the state of Massachusetts, followed by over two-thirds of state legislatures adopting some form of anti-dilution statutes. In order to bring uniformity and an order, the need for enactment of Federal Law escalated. Ergo, on January 16, 1996, President Clinton, passed the Federal Trademark Dilution Act of 1995, amplifying the protection given to the famous trademarks from being diluted by introducing section 43(c) into the Act.

Pursuant to the case of Moseley v. V Secret Catalogue, Inc., 537 U.S. 418 (2003), where the Supreme Court determined that in order to succeed in the case of trademark dilution, the owner of a famous mark must establish the occurrence of actual dilution, and not the likelihood of dilution. In other words, the occurrence of dilution can only be proven by evidence of actual damage or harm caused to the famous mark in the form of economic injury or if the consumers started to perceive the famous mark less favorably. Nevertheless, Supreme Court did not provide much guidance on the type and amount of proof required to succeed the case of dilution of the famous mark. Interestingly, relevance of tarnishment was not disputed, but the Supreme Court questioned whether it was prohibited by the language of the statute. It said that an evidence of actual dilution must be shown, not mere mental association between the mark and the famous mark because blurring doesn’t happen only by means of mental association. The Supreme court while sharing its opinion in this following case commented saying, that direct evidence of dilution must be proven by circumstantial evidence, especially in the obvious case where the infringed mark and famous mark are identical. It would be required by the Congress to clarify if dilution by tarnishment is prohibited by the law, if that is the intention, then the standard from one requiring to establish actual dilution and proving of actual economic harm to a mere showing of likelihood of dilution without no economic injury is required to be altered by the Congress.

Even though the owners of famous trademark were able to get favorable results when seeking to prevent dilution of an identical mark as established in Savin Corp. v. The Savin Group, 391 F.3d 439 (2d Cir. 2004), the U.S. District Court of Appeals passed a decree saying that when the marks are identical, not merely similar, no further proof is needed. However, the main concern is what amounts to proof to establish a successful dilution case is uncertain and also it did not lay down provisions differentiating between actual dilution and the likelihood of dilution. Hence, it called for more detailed law on dilution, accordingly in 2006, the Trademark Dilution Revision Act (TDRA) was passed to meet the inconsistencies in the Trademark Dilution Act of 1995. Thus, eliminating the burden of establishing actual dilution.

The Trademark Dilution Revision Act, 2006, was a sigh of relief to many owners of the famous trademark as it was successful in overcoming the legal barriers, as according to the revised act the dilution of a trademark can be provoked by establishing a likelihood of dilution (harm). Thus, enabling the owner of the famous trademark to protect the mark from being diluted at the very first instance it is likely to be diluted.

The Trademark Dilution Revision Act (TDRA) explicitly states that ― 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. Hence, now it would be easy for a plaintiff to prove dilution, but the act sets out the factors to determine what marks could said to be famous:

1. The duration and the extent of use of the mark,
2. The duration and the extent of advertising the mark,
3. The geographic area in which the marks are used,
4. The degree of distinctiveness of the mark,
5. The degree of recognition of the mark,
6. The method by which the product was distributed and marketed,
7.  The use of the mark by third parties,
8. Whether the mark was federally registered.

The act further states that the dilution of the trademark can be caused in two ways: (i) Blurring (ii) Tarnishing. Dilution by blurring is caused when an association could be made between a mark or trade name and a famous mark, because of the similarity, in turn leading to the impairment of the distinctiveness of the famous mark. Hence, for proving blurring, the following must be established:

1. Association between the mark and famous mark. In other words, a mental connection relating the defendant’s mark to that of the plaintiff’s mark.
2. There must be existence of similarity between a mark and a famous mark to the extent where the consumer associates the plaintiff’s mark with the defendant’s mark.
3. Damage should be caused to the distinctiveness of the famous mark.

Dilution by tarnishment can be caused when the association between the mark or trade name and a famous mark, because of its similarity, tends to harm or weaken the reputation of the trademark. The kind of association must be negative or unsavory, causing damage to the reputation of the famous mark. Tranishment generally takes place when the mark is used by a different trader in unrelated goods that are of inferior quality to those of the famous mark’s holder. Hence, the following factors must be considered while establishing dilution by tarnishment:

1. When there is an association between the mark and a famous mark,
2. There must be the existence of similarities between the mark and the famous mark,
3. hat similarity must cause harm to the reputation of the famous mark.  

In the landmark case of Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., the US Court of Appeals for the second circuit has consented to the judgment of the District Court while determining the degree of substantial similarity between the famous mark and the infringing mark. In this following case, Starbucks, the plaintiff, claims an injunction as per the Federal Trademark Dilution Act of 1995, prohibiting the Wolfe’s Borough Coffee, the defendant from using Black Bear’s “Mister Charbucks,” and “Charbucks Blend” marks (the “Charbucks Marks”). The court held that there was no error by the district in finding the minimal similarity between the marks. The survey conducted by the district court to determine the similarity showed that the association between these two marks was relatively small. Therefore, the defendants are not diluting the famous trademark by blurring.

Exceptions to the trademark dilution:  The law expressly excludes certain acts from the ambit of dilution on the basis of fair use and in order to protect free speech. It exempts nominative or descriptive uses of another’s mark for the purposes of:

• Advertising or promotion, allows the consumer to compare goods and services.
• In parodying, criticizing, or commenting upon a famous mark’s owner or its goods and services.
• Also, to protect publishers and Web search engines, the legislation also exempts the act of facilitating comparative advertising and other fair uses
• And all sorts of news reporting and news commentary and any non-commercial use of the mark.