Moseley Revisited: What the Victoria's Secret Case Means

The Court's only example of a circumstantial case, however, was “the obvious” one where “the junior and senior marks are identical.” Not all offending marks mirror exactly the famous marks they dilute, however, so the Moseley decision makes clear that consumer survey evidence will likely be necessary to show actual dilution where marks are not identical. To be effective, surveys must focus closely on dilution as the FTDA defines it: “the lessening of the capacity of a famous mark to identify and distinguish goods and services.” The Court emphasized that a mere showing that a junior user's mark causes consumers to make a mental association with a famous mark will not by itself establish dilution.

The Moseley decision's evidentiary burden is lighter than it might appear initially. While actual dilution is now clearly an element to an FTDA claim, showing actual dilution is not always a perquisite for relief. The FTDA provides for injunctive relief to prevent dilution before it occurs. Justice Kennedy took pains to highlight that fact in his concurring opinion. While he agreed that actual dilution is required to establish a violation of the FTDA, he pointed out that the FTDA allows also for injunctive relief “to prevent a violation” before one has occurred. (15 U.S.C.A. '1126(a), with emphasis as added in Justice Kennedy's Concurring Opinion.) Thus, a completed FTDA violation requires actual dilution, but the FTDA's injunctive relief provisions give famous mark owners power to prevent dilution of their marks before it occurs.

This distinction was easily obscured by the Court's focus on the facts before it. It was reviewing a Sixth Circuit decision, which had affirmed an injunction prohibiting Victor and Cathy Moseley from continuing to use the “Victor's Little Secret” name for their small lingerie and “adult novelties” store in Elizabethtown, Kentucky. The Respondents owned the VICTORIA'S SECRET trademark, operated 750 Victoria's Secret lingerie stores, and annually distributed 400 million Victoria's Secret lingerie catalogs. The record, however, showed only that Petitioners' store advertisement, under its original “Victor's Secret” name, had caused one person to make a mental association with the VICTORIA'S SECRET mark. The advertisement had not, however, caused him to form a different impression of Respondents' VICTORIA'S SECRET store.

The Court found in the record “a complete absence of evidence” that any lessening of the VICTORIA'S SECRET mark's capacity to identify and distinguish its goods had occurred. Had the Respondents sought an injunction to prevent a violation of the FTDA before the Petitioners commenced use of the Victor's Little Secret name, showing actual dilution would have been unnecessary. Either way, had the Respondents conducted a tailored survey, they might well have obtained the evidence required for relief.

In addition to addressing proof requirements, the Moseley decision cast doubt on whether the FTDA covers dilution by tarnishment, which occurs when a defendant's use harms a plaintiff's mark by creating negative associations. Hasbro, the owner of the CANDY LAND mark for children's games, for example, obtained an injunction against the tarnishment it suffered by another's use of “Candyland” in the domain name for an obscene web site. The Moseley Court, however, focused on the fact that state anti-dilution statutes expressly prohibit dilution by tarnishment and by blurring, while the FTDA “refers only to the latter,” which the Court felt “arguably supported a narrower reading of the FTDA.”

There have been a number of cases, however, holding that the FTDA covers dilution by tarnishment, including: Hasbro, Inc. v. Internet Entertainment Group, Ltd., 40 U.S.P.Q.2d 1479 (W.D. Wash. 1996), Anheuser-Busch v. Andy's Sportswear, Inc., 40 U.S.P.Q.2d 1542 (N.D. Cal. 1996), Toys “R” Us, Inc. v. Akkauoi, 40 U.S.P.Q.2d 1836 (N.D. Cal. 1996), Mattel Inc. v. Jcom Inc., 48 U.S.P.Q.2d 146 (S.D.N.Y. 2000), and America Online, Inc. v. IMS, 48 U.S.P.Q.2d 1857 (E.D. Va. 1998).

The Moseley Petitioners had not questioned whether the FTDA covers tarnishment, so the Court's observations are dicta. Justice Kennedy's concurring opinion seemed to challenge that dicta. It noted that injunctive relief was still available to the Respondents if they “present sufficient evidence of either blurring or tarnishment” on remand. (Emphasis added.)

Tarnishmnent & Consequences

The Justices' tarnishment discussions bring additional practical consequences. Now that the overwhelming majority of the Supreme Court has questioned the FTDA's coverage of dilution by tarnishment, famous trademark owners will be wise to include state anti-dilution tarnishment claims, where available, with any federal tarnishment claims they bring. Plaintiffs employing state anti-dilution laws should be aware also that the FTDA makes a defendant's ownership of a federal trademark registration a complete bar to state and to common law anti-dilution actions. The Trademarks Amendments Act of 1999, however, made dilution of a famous mark a basis for opposition or cancellation of a federal trademark registration, giving vigilant plaintiffs the means to attack potential bars to state and common law actions.

While state dilution laws clearly have heightened strategic importance in our post-Moseley world, the dilution-by-tarnishment and dilution-by-blurring distinctions may be primarily semantic. The FTDA defines dilution as “the lessening of the capacity of a famous mark to identify and distinguish goods or services.” One can easily argue that that definition encompasses uses that have been traditionally viewed as tarnishment. Use of Candyland in an obscene domain name, for example, not only created negative associations for the famous CANDY LAND mark, it also can be viewed as having simultaneously lessened the capacity of the CANDY LAND mark to identify children's games. Thus, the net practical result of the Court's tarnishment dicta may be that plaintiffs will word their claims more carefully now, to show that negative associations not only harm business reputations but also lessen the distinctiveness of famous marks.

Especially in the context of an obscene use of a famous mark, plaintiffs should be aware that while the FTDA's primary remedy is injunctive relief, it also provides for damages, including treble damages, when a defendant willfully intended to trade on the famous mark's reputation or to dilute it. In detailing what the FTDA covers, it is worthwhile to consider also its exceptions. It does not prohibit a famous mark's use in comparative advertising or promotions that identify competing goods or services. It also does not cover non-commercial uses of a mark, or a mark's use in news reporting or news commentary.

The FTDA also does not protect consumers from confusion, because dilution protects the property right and good will associated with a famous mark. While a trademark used on competing goods or services can violate the FTDA, plaintiffs should consider thoroughly the prudence of bringing an FTDA claim against competitors. Proving a use has lessened the capacity of a famous mark to identify and distinguish goods or services can be more difficult than is establishing the likelihood of consumer confusion needed to prevail in a trademark infringement claim.

Thus, old-fashioned trademark infringement is often the more prudent claim to bring against a competitor, even when an FTDA violation concurrently exists. Bringing two claims, of course, is possible, but plaintiffs should consider carefully how they allocate their legal resources. The Moseley Court went out of its way to note that trademark infringement appeared to be the more appropriate cause of action for the VICTORIA'S SECRET mark owners. They had, in fact, included an infringement claim in their original suit, but had not appealed its dismissal on summary judgment.

Future FTDA Cases

The Moseley case clearly illustrates many practical pointers for potential FTDA plaintiffs, who will now be careful to show actual dilution, as opposed to a likelihood of dilution, when making claims of an FTDA violation. They should not, however, misread the Moseley decision to mean that they must suffer harm before a court will grant relief, because the FTDA still provides for preventative injunctions before a defendant has commenced or expands a prior minimal use. Either way, plaintiffs will now employ survey evidence more, and should take extra care in framing FTDA claims for what has traditionally been called “dilution by tarnishment.”

The Supreme Court's recent Federal Trademark Dilution Act (FTDA) opinion, Moseley et al. dba Victor's Little Secret v. V Secret Catalogue, Inc. et al., has a number of practical consequences. It settled an issue that had split the Circuits for years: whether actual dilution or a “likelihood of dilution” must be shown to establish an FTDA violation. Dilution law seeks to prevent the diminution or whittling away of a famous trademark's value through another's commercial use of the same or a similar mark. That somewhat abstract harm suggests the less concrete “likelihood of dilution” standard would more logically apply. (The FTDA grants relief only to famous trademark owners, and lists eight factors used to determine whether a mark is famous: the mark's degree of inherent or acquired distinctiveness, the duration and extent of the mark's use on the goods or services with which the mark is used, the duration and extent of advertising and publicity of the mark; the geographical extent of the trading area in which the mark is used; the channels of trade for the goods or services with which the mark is used; the degree of recognition of the mark in the trading areas and channels of trade used by the marks' owner and the defendant; the nature and extent of use for the same or similar marks by third parties; and whether the marks is federally registered. The following marks are among those that courts have found to be famous: AOL, BARBIE, BUDWEISER, CARTIER, DON'T LEVE HOME WITHOUT US, ETCH-A-SKETCH, TYLENOL, PORSCHE, and TOYS R US.)

Actual Dilution Required

In Moseley, the Court unanimously held that proof of actual dilution must be shown to establish an FTDA violation, because the statute prohibits trademark use that “causes dilution.” It contrasted that wording with state anti-dilution statutes and parts of the federal Lanham Act, which refer to a “likelihood” of harm. The consequences of dilution such as lost sales, need not be shown. Direct evidence, such as consumer surveys, is also unnecessary where dilution can be reliably proved through circumstantial evidence.

The Court's only example of a circumstantial case, however, was “the obvious” one where “the junior and senior marks are identical.” Not all offending marks mirror exactly the famous marks they dilute, however, so the Moseley decision makes clear that consumer survey evidence will likely be necessary to show actual dilution where marks are not identical. To be effective, surveys must focus closely on dilution as the FTDA defines it: “the lessening of the capacity of a famous mark to identify and distinguish goods and services.” The Court emphasized that a mere showing that a junior user's mark causes consumers to make a mental association with a famous mark will not by itself establish dilution.

The Moseley decision's evidentiary burden is lighter than it might appear initially. While actual dilution is now clearly an element to an FTDA claim, showing actual dilution is not always a perquisite for relief. The FTDA provides for injunctive relief to prevent dilution before it occurs. Justice Kennedy took pains to highlight that fact in his concurring opinion. While he agreed that actual dilution is required to establish a violation of the FTDA, he pointed out that the FTDA allows also for injunctive relief “to prevent a violation” before one has occurred. (15 U.S.C.A. '1126(a), with emphasis as added in Justice Kennedy's Concurring Opinion.) Thus, a completed FTDA violation requires actual dilution, but the FTDA's injunctive relief provisions give famous mark owners power to prevent dilution of their marks before it occurs.

This distinction was easily obscured by the Court's focus on the facts before it. It was reviewing a Sixth Circuit decision, which had affirmed an injunction prohibiting Victor and Cathy Moseley from continuing to use the “Victor's Little Secret” name for their small lingerie and “adult novelties” store in Elizabethtown, Kentucky. The Respondents owned the VICTORIA'S SECRET trademark, operated 750 Victoria's Secret lingerie stores, and annually distributed 400 million Victoria's Secret lingerie catalogs. The record, however, showed only that Petitioners' store advertisement, under its original “Victor's Secret” name, had caused one person to make a mental association with the VICTORIA'S SECRET mark. The advertisement had not, however, caused him to form a different impression of Respondents' VICTORIA'S SECRET store.

The Court found in the record “a complete absence of evidence” that any lessening of the VICTORIA'S SECRET mark's capacity to identify and distinguish its goods had occurred. Had the Respondents sought an injunction to prevent a violation of the FTDA before the Petitioners commenced use of the Victor's Little Secret name, showing actual dilution would have been unnecessary. Either way, had the Respondents conducted a tailored survey, they might well have obtained the evidence required for relief.

In addition to addressing proof requirements, the Moseley decision cast doubt on whether the FTDA covers dilution by tarnishment, which occurs when a defendant's use harms a plaintiff's mark by creating negative associations. Hasbro, the owner of the CANDY LAND mark for children's games, for example, obtained an injunction against the tarnishment it suffered by another's use of “Candyland” in the domain name for an obscene web site. The Moseley Court, however, focused on the fact that state anti-dilution statutes expressly prohibit dilution by tarnishment and by blurring, while the FTDA “refers only to the latter,” which the Court felt “arguably supported a narrower reading of the FTDA.”

There have been a number of cases, however, holding that the FTDA covers dilution by tarnishment, including: Hasbro, Inc. v. Internet Entertainment Group , Ltd., 40 U.S.P.Q.2d 1479 (W.D. Wash. 1996), Anheuser-Busch v. Andy's Sportswear, Inc. , 40 U.S.P.Q.2d 1542 (N.D. Cal. 1996), Toys “R” Us, Inc. v. Akkauoi , 40 U.S.P.Q.2d 1836 (N.D. Cal. 1996), Mattel Inc. v. Jcom Inc., 48 U.S.P.Q.2d 146 (S.D.N.Y. 2000), and America Online, Inc. v. IMS , 48 U.S.P.Q.2d 1857 (E.D. Va. 1998).

The Moseley Petitioners had not questioned whether the FTDA covers tarnishment, so the Court's observations are dicta. Justice Kennedy's concurring opinion seemed to challenge that dicta. It noted that injunctive relief was still available to the Respondents if they “present sufficient evidence of either blurring or tarnishment” on remand. (Emphasis added.)

Tarnishmnent & Consequences

The Justices' tarnishment discussions bring additional practical consequences. Now that the overwhelming majority of the Supreme Court has questioned the FTDA's coverage of dilution by tarnishment, famous trademark owners will be wise to include state anti-dilution tarnishment claims, where available, with any federal tarnishment claims they bring. Plaintiffs employing state anti-dilution laws should be aware also that the FTDA makes a defendant's ownership of a federal trademark registration a complete bar to state and to common law anti-dilution actions. The Trademarks Amendments Act of 1999, however, made dilution of a famous mark a basis for opposition or cancellation of a federal trademark registration, giving vigilant plaintiffs the means to attack potential bars to state and common law actions.

While state dilution laws clearly have heightened strategic importance in our post-Moseley world, the dilution-by-tarnishment and dilution-by-blurring distinctions may be primarily semantic. The FTDA defines dilution as “the lessening of the capacity of a famous mark to identify and distinguish goods or services.” One can easily argue that that definition encompasses uses that have been traditionally viewed as tarnishment. Use of Candyland in an obscene domain name, for example, not only created negative associations for the famous CANDY LAND mark, it also can be viewed as having simultaneously lessened the capacity of the CANDY LAND mark to identify children's games. Thus, the net practical result of the Court's tarnishment dicta may be that plaintiffs will word their claims more carefully now, to show that negative associations not only harm business reputations but also lessen the distinctiveness of famous marks.

Especially in the context of an obscene use of a famous mark, plaintiffs should be aware that while the FTDA's primary remedy is injunctive relief, it also provides for damages, including treble damages, when a defendant willfully intended to trade on the famous mark's reputation or to dilute it. In detailing what the FTDA covers, it is worthwhile to consider also its exceptions. It does not prohibit a famous mark's use in comparative advertising or promotions that identify competing goods or services. It also does not cover non-commercial uses of a mark, or a mark's use in news reporting or news commentary.

The FTDA also does not protect consumers from confusion, because dilution protects the property right and good will associated with a famous mark. While a trademark used on competing goods or services can violate the FTDA, plaintiffs should consider thoroughly the prudence of bringing an FTDA claim against competitors. Proving a use has lessened the capacity of a famous mark to identify and distinguish goods or services can be more difficult than is establishing the likelihood of consumer confusion needed to prevail in a trademark infringement claim.

Thus, old-fashioned trademark infringement is often the more prudent claim to bring against a competitor, even when an FTDA violation concurrently exists. Bringing two claims, of course, is possible, but plaintiffs should consider carefully how they allocate their legal resources. The Moseley Court went out of its way to note that trademark infringement appeared to be the more appropriate cause of action for the VICTORIA'S SECRET mark owners. They had, in fact, included an infringement claim in their original suit, but had not appealed its dismissal on summary judgment.

Future FTDA Cases

The Moseley case clearly illustrates many practical pointers for potential FTDA plaintiffs, who will now be careful to show actual dilution, as opposed to a likelihood of dilution, when making claims of an FTDA violation. They should not, however, misread the Moseley decision to mean that they must suffer harm before a court will grant relief, because the FTDA still provides for preventative injunctions before a defendant has commenced or expands a prior minimal use. Either way, plaintiffs will now employ survey evidence more, and should take extra care in framing FTDA claims for what has traditionally been called “dilution by tarnishment.”