Victor's Victorious

The United States Supreme Court decided its first Federal Trademark Dilution Act (FTDA) case on March 4, 2003, in Moseley et al. dba Victor's Little Secret v. V Secret Catalogue, Inc. et al. The Court granted certiorari to settle the Circuits' differing opinions on whether relief under the FTDA requires a showing of objective proof of actual injury to the economic value of a famous mark, as opposed to a presumption of harm arising from a subjective 'likelihood of dilution' showing.

In deciding that objective proof of actual injury is required, the Court unanimously reversed the Sixth Circuit's decision, which had affirmed an injunction prohibiting the Petitioners, Victor and Cathy Moseley, from using the 'Victor's Little Secret' name for their small lingerie and 'adult novelties' store in Elizabethtown, Kentucky. The Respondents were the affiliated corporations that own the VICTORIA'S SECRET trademark, operate 750 Victoria's Secret lingerie stores, including two in Elizabethtown, and distribute 400 million copies of the Victoria's Secret lingerie catalog each year, including 39,000 in Elizabethtown.

The Court focused on the FTDA's definition of dilution: 'the lessening of the capacity of a famous mark to identify and distinguish goods or services.' It noted that while Respondents' VICTORIA'S SECRET trademark was unquestionably valuable and the Petitioners had not challenged that it was 'famous' as defined in the FTDA, the record had reavealed 'a complete absence of evidence' that Petitioner's store name had caused any lessening of the VICTORIA'S SECRET mark's capacity to identify and distinguish its goods or services. The record had shown only that an advertisement for Petitioners' store, under its original 'Victor's Secret' name, had caused one person to make a mental association with the VICTORIA'S SECRET mark, but it had not caused him to form any different impression of Respondents' VICTORIA'S SECRET store.

The Court hinted that infringement might have been the more appropriate cause of action for these facts. The Respondents, however, had not appealed the lower court's dismissal of their infringement claim, so the Court  decided the case on the assumption that the Moseleys' store name had neither confused any consumers or potential consumers, nor was it likely to do so. The court explained that trademark dilution is 'not motivated by an interest in protecting consumers.' Dilution law, protects the selling power of a trademark, while infringement law protects consumers who might be confused by different parties' use of similar marks.

The Court contrasted state statutes and the FTDA in reaching its holding that the FTDA requires a showing of actual dilution. It observed that state anti-dilutions statutes, like several provisions in the federal Lanham Act, repeatedly refer to a 'likelihood' of harm, rather than to a completed harm. In contrast, the FTDA states that a famous mark's owner is entitled to relief against another's commercial use of a mark or trade name if that use 'causes dilution of the distinctive quality of the famous mark.' (15 U.S.C. '1125(c)(1)) (Emphasis added in the Court's opinion.)

The Court concluded that the FTDA  'unambiguously requires a showing of actual dilution, rather than a likelihood of dilution.' It, however, rejected the 4th Circuit's stricter requirement that actual economic harm (eg, actual loss of sales or profits) be shown. While the Court acknowledged that showing actual dilution could be challenging, it emphasized that proof difficulties do not justify dispensing with 'an essential element of a statutory violation.'

After holding that the FTDA requires a showing of actual dilution, the Court provided little guidance on how to show actual dilution. It noted that the consequences of dilution, 'such as an actual loss of sales or profits' did not have to be proved. It offered also that direct dilution evidence, such as consumer surveys, would be unnecessary where circumstantial evidence could reliably prove actual dilution. Its only example of a circumstantial evidence case, however was 'the obvious case' in which 'the junior and senior marks are identical.'

The Court offered a final glint of guidance by cautioning that, at least where the two marks are not identical, the mere fact that consumers mentally associate a junior user's mark with a famous mark could not by itself prove dilution. The Court explained that such an association 'will not necessarily reduce the famous mark's capacity to identify the goods of its owner,' so it alone cannot show actual dilution.

Lastly, an interesting facet of the Moseley decision is the Court's discourse on the two types of trademark dilution, 'tarnishment' and 'blurring,' and its assertion that the FTDA might not cover tarnishment. The Court reasoned that while state anti-dilution statutes expressly refer to both tarnishment and blurring dilution, 'the federal statute ' refers only to the latter' and that contrast 'arguably supports a narrower reading of the FTDA.'

Justice Kennedy's concurring opinion, however, noted that the 'Court's opinion does not foreclose injunctive relief if respondents on remand present sufficient evidence of either blurring or tarnishment.' (Emphasis added.) That wording suggests that Justice Kennedy intentionally contradicted the Court's dicta favoring the 'narrower reading of the FTDA' which would exclude tarnishment from the FTDA's purview. The Moseley Petitioners, however, had not questioned whether the FTDA covers tarnishment. Now that the Justices have expressly raised that question, it is a likely candidate for future FTDA case law. Thus, while the Moseley decision  settled the circuits' differing opinions on whether relief under the FTDA requires objective  proof of actual injury  to the economic value of a famous mark, it sheds dim light on how to prove that injury and casts doubt on whether the FTDA covers dilution by tarnishment.

Karen Marie Kitterman is an attorney with Fenwick & West LLP's intellectual property group.

The United States Supreme Court decided its first Federal Trademark Dilution Act (FTDA) case on March 4, 2003, in Moseley et al. dba Victor's Little Secret v. V Secret Catalogue, Inc. et al. The Court granted certiorari to settle the Circuits' differing opinions on whether relief under the FTDA requires a showing of objective proof of actual injury to the economic value of a famous mark, as opposed to a presumption of harm arising from a subjective 'likelihood of dilution' showing.

In deciding that objective proof of actual injury is required, the Court unanimously reversed the Sixth Circuit's decision, which had affirmed an injunction prohibiting the Petitioners, Victor and Cathy Moseley, from using the 'Victor's Little Secret' name for their small lingerie and 'adult novelties' store in Elizabethtown, Kentucky. The Respondents were the affiliated corporations that own the VICTORIA'S SECRET trademark, operate 750 Victoria's Secret lingerie stores, including two in Elizabethtown, and distribute 400 million copies of the Victoria's Secret lingerie catalog each year, including 39,000 in Elizabethtown.

The Court focused on the FTDA's definition of dilution: 'the lessening of the capacity of a famous mark to identify and distinguish goods or services.' It noted that while Respondents' VICTORIA'S SECRET trademark was unquestionably valuable and the Petitioners had not challenged that it was 'famous' as defined in the FTDA, the record had reavealed 'a complete absence of evidence' that Petitioner's store name had caused any lessening of the VICTORIA'S SECRET mark's capacity to identify and distinguish its goods or services. The record had shown only that an advertisement for Petitioners' store, under its original 'Victor's Secret' name, had caused one person to make a mental association with the VICTORIA'S SECRET mark, but it had not caused him to form any different impression of Respondents' VICTORIA'S SECRET store.

The Court hinted that infringement might have been the more appropriate cause of action for these facts. The Respondents, however, had not appealed the lower court's dismissal of their infringement claim, so the Court  decided the case on the assumption that the Moseleys' store name had neither confused any consumers or potential consumers, nor was it likely to do so. The court explained that trademark dilution is 'not motivated by an interest in protecting consumers.' Dilution law, protects the selling power of a trademark, while infringement law protects consumers who might be confused by different parties' use of similar marks.

The Court contrasted state statutes and the FTDA in reaching its holding that the FTDA requires a showing of actual dilution. It observed that state anti-dilutions statutes, like several provisions in the federal Lanham Act, repeatedly refer to a 'likelihood' of harm, rather than to a completed harm. In contrast, the FTDA states that a famous mark's owner is entitled to relief against another's commercial use of a mark or trade name if that use 'causes dilution of the distinctive quality of the famous mark.' (15 U.S.C. '1125(c)(1)) (Emphasis added in the Court's opinion.)

The Court concluded that the FTDA  'unambiguously requires a showing of actual dilution, rather than a likelihood of dilution.' It, however, rejected the 4th Circuit's stricter requirement that actual economic harm (eg, actual loss of sales or profits) be shown. While the Court acknowledged that showing actual dilution could be challenging, it emphasized that proof difficulties do not justify dispensing with 'an essential element of a statutory violation.'

After holding that the FTDA requires a showing of actual dilution, the Court provided little guidance on how to show actual dilution. It noted that the consequences of dilution, 'such as an actual loss of sales or profits' did not have to be proved. It offered also that direct dilution evidence, such as consumer surveys, would be unnecessary where circumstantial evidence could reliably prove actual dilution. Its only example of a circumstantial evidence case, however was 'the obvious case' in which 'the junior and senior marks are identical.'

The Court offered a final glint of guidance by cautioning that, at least where the two marks are not identical, the mere fact that consumers mentally associate a junior user's mark with a famous mark could not by itself prove dilution. The Court explained that such an association 'will not necessarily reduce the famous mark's capacity to identify the goods of its owner,' so it alone cannot show actual dilution.

Lastly, an interesting facet of the Moseley decision is the Court's discourse on the two types of trademark dilution, 'tarnishment' and 'blurring,' and its assertion that the FTDA might not cover tarnishment. The Court reasoned that while state anti-dilution statutes expressly refer to both tarnishment and blurring dilution, 'the federal statute ' refers only to the latter' and that contrast 'arguably supports a narrower reading of the FTDA.'

Justice Kennedy's concurring opinion, however, noted that the 'Court's opinion does not foreclose injunctive relief if respondents on remand present sufficient evidence of either blurring or tarnishment.' (Emphasis added.) That wording suggests that Justice Kennedy intentionally contradicted the Court's dicta favoring the 'narrower reading of the FTDA' which would exclude tarnishment from the FTDA's purview. The Moseley Petitioners, however, had not questioned whether the FTDA covers tarnishment. Now that the Justices have expressly raised that question, it is a likely candidate for future FTDA case law. Thus, while the Moseley decision  settled the circuits' differing opinions on whether relief under the FTDA requires objective  proof of actual injury  to the economic value of a famous mark, it sheds dim light on how to prove that injury and casts doubt on whether the FTDA covers dilution by tarnishment.

Karen Marie Kitterman is an attorney with Fenwick & West LLP's intellectual property group.