Dilution Differences

The Federal Trademark Dilution Act (FTDA) provides that the owner of a famous mark is entitled to injunctive relief against another's use of a mark or trade name that causes dilution of the distinctive quality of the famous mark.

In Moseley v. V Secret Catalogue, Inc., 537 U.S. 418 (2003), the U.S. Supreme Court considered whether the FTDA requires proof of actual harm or merely a likelihood of harm. The Supreme Court's decision raised the dilution bar by holding that a prerequisite to relief under the FTDA is proof of “actual” dilution, ie, objective proof of actual injury to the economic value of the mark, rather than a mere showing of a presumption of harm based on a subjective “likelihood of dilution” standard.

However, the Trademark Trial and Appeal Board (TTAB) follows a different standard in the U.S. Patent and Trademark Office (USPTO) for opposition and cancellation proceedings involving intent to use (ITU) applications. F or these applications, a finding of dilution in a TTAB proceeding can be based merely upon a showing of “likelihood” of dilution.

Why the Different Standard?

The nature of ITU applications and applicable provisions of the Trademark Act warrant a lesser standard in the TTAB than in the federal courts. Although the standard differs, it is logical and consistent with the Trademark Amendments Act of 1999 (TAA). Otherwise, opposing an ITU application based on dilution would put the opposer in the untenable situation of not being able to prove dilution under an actual dilution standard. Under no set of circumstances could the opposer prove actual harm because the mark has not yet been used in the marketplace. The solution and the basis for the different standard can be found in the TAA amendments to Section 13 (oppositions) and Section 14 (cancellations) which provide for oppositions by any person “who believes that he would be damaged … including as a result of dilution,” and for cancellations “by any person who believes that he is or will be damaged, including as a result of dilution.” As a result of these changes, the Board has concluded that Congress intended to allow Board proceedings based upon a showing of a likelihood of dilution.

The Board so held in a pre-Moseley decision, Toro Co. v. ToroHead Inc., 61 USPQ2d 1164 (TTAB 2001). Toro was an opposition proceeding in which the opposer, Toro Company, owned federal registrations for the mark TORO for lawn mowers, turf tractors, sprinkling systems, and other machines for landscape care. Toro Company opposed the ITU application to register the mark “ToroMR” combined with a bull's head design for “very low reluctance, thin film magnetic reading and writing heads for sale to OEM manufacturers of high performance computer disk drives.” Toro Company provided extensive evidence of its continuous use of the TORO mark since 1914, advertising expenditures of $35 million to $40 million annually in a variety of media, a network of 3000 dealers worldwide, and annual sales in excess of $1.3 billion a year. The TTAB found that general sales and advertising figures were insufficient to establish that the TORO mark was famous and distinctive. Thus, the mark was not eligible for protection under the FTDA. Although Toro did not find dilution, it established a likelihood of dilution standard for oppositions against ITU applications. The Board reasoned that if it required an opposer to prove actual dilution, then most trademark owners would not be able to prevail on a dilution claim in an opposition against an ITU application. Toro, 61 USPQ2d at 1174.

But did the likelihood of dilution standard from Toro remain standing after Moseley? This question was answered affirmatively in a recent post-Moseley decision, NASDAQ Stock Market, Inc. v. Antartica, S.R.L., 2003 WL 22021943 (TTAB 2003). In NASDAQ, an Italian sporting goods company sought to register, via an ITU application, a design mark featuring the word NASDAQ and a stylized red griffon without use under section 44 of the Lanham Act, for safety helmets for bicycling, motorcycling and skiing, sport clothing and goggles, various ski equipment and various exercise equipment. The NASDAQ Stock Market, Inc. opposed the registration, alleging both likelihood of confusion and likelihood of dilution. The opposer owned a registration for the mark NASDAQ on the Principal Register for “listing of securities for quotation for sale or information purposes.”

Before it addressed the merits of the dilution claim, the Board acknowledged Moseley and considered the impact of the Supreme Court's ruling. Distinguishing opposition and cancellation proceedings from civil actions, the TTAB held that the owner of a famous mark may prevail in an opposition or cancellation proceeding against an ITU application based upon a showing of a mere “likelihood” of dilution. The Board noted that although Congress intended actual dilution to be a prerequisite to judicial relief, Congress also intended that a different standard be employed when deciding the right to register a mark based on intent to use, for the reasons previously stated. Although the opposition was sustained and registration refused based on a likelihood of confusion, the TTAB also sustained the opposition based on opposer's claim of dilution, ie, the likelihood that the Italian company's NASDAQ mark would dilute opposer's inherently distinctive and famous trademark.

Toro and NASDAQ establish that an opposition proceeding can be sustained based upon a likelihood of dilution standard for ITU applications. But what about oppositions against use-based applications? Moseley dictates that the standard should be actual dilution and it appears that the TTAB agrees. Pep Boys Manny, Moe & Jack of California v. Cherng Lian, 2003 TTAB Lexis 190 (TTAB April 16, 2003). In framing the issues, the TTAB considered: 1) whether opposer's PEP BOYS marks were famous and distinctive and, if so, 2) whether applicant's use of its mark began after opposer's marks had become famous and 3) whether such use causes dilution of the distinctive quality of opposer's mark. The Board found that applicant's mark ROAD BOY was so different that it could not cause dilution of the distinctive quality of any of opposer's PEP BOYS marks. Although not citable as precedent, this post-Moseley decision by the TTAB suggests that actual dilution is the standard in oppositions against use-based applications.

What Are the Ramifications of these Decisions for Trademark Owners?

Relief. While the “likely” standard in TTAB proceedings involving ITU applications is lower than the “actual” standard in civil actions, so is the allowable relief. A finding of dilution in a TTAB proceeding only prevents registration, not use. Nevertheless, in addition to likelihood of confusion, dilution remains a viable option as a basis for an opposition proceeding for owners of famous marks to prevent registration of “potentially” damaging marks, ie, a mark which is the subject of an ITU application. The lesser standard in TTAB proceedings may encourage owners of famous marks to pursue relief based on dilution, thereby increasing the number of dilution claims in oppositions.

Clearance Searches. These decisions also change the scope of clearance searches conducted prior to registering a mark. When conducting clearance searches for proposed new marks and filing ITU applications, consideration should also be given to whether an application for registration of the proposed new mark, even though not in use, may be opposed based on a “likelihood” of dilution standard. The scope of searches should be broader than merely focusing on related classes to assess likelihood of confusion. Dilution should also be evaluated by expanding the search to include marks in unrelated classes for unrelated goods.

The Bottom Line. Depending on the circumstances, TTAB proceedings may provide a simpler and more economical way to initiate and pursue a dilution claim against an ITU application. The trademark owner and the applicant are both likely to be guided by a TTAB decision, which might be rendered before an applicant invests significant resources in using the mark, and before dilution of the owner's mark occurs in the marketplace. Ultimately, the lesser burden of proof in the TTAB allows greater opportunity for an owner of a famous mark to attack ITU marks that can damage their own famous mark and good will associated with it.

The Federal Trademark Dilution Act (FTDA) provides that the owner of a famous mark is entitled to injunctive relief against another's use of a mark or trade name that causes dilution of the distinctive quality of the famous mark.

In Moseley v. V Secret Catalogue, Inc. , 537 U.S. 418 (2003), the U.S. Supreme Court considered whether the FTDA requires proof of actual harm or merely a likelihood of harm. The Supreme Court's decision raised the dilution bar by holding that a prerequisite to relief under the FTDA is proof of “actual” dilution, ie, objective proof of actual injury to the economic value of the mark, rather than a mere showing of a presumption of harm based on a subjective “likelihood of dilution” standard.

However, the Trademark Trial and Appeal Board (TTAB) follows a different standard in the U.S. Patent and Trademark Office (USPTO) for opposition and cancellation proceedings involving intent to use (ITU) applications. F or these applications, a finding of dilution in a TTAB proceeding can be based merely upon a showing of “likelihood” of dilution.

Why the Different Standard?

The nature of ITU applications and applicable provisions of the Trademark Act warrant a lesser standard in the TTAB than in the federal courts. Although the standard differs, it is logical and consistent with the Trademark Amendments Act of 1999 (TAA). Otherwise, opposing an ITU application based on dilution would put the opposer in the untenable situation of not being able to prove dilution under an actual dilution standard. Under no set of circumstances could the opposer prove actual harm because the mark has not yet been used in the marketplace. The solution and the basis for the different standard can be found in the TAA amendments to Section 13 (oppositions) and Section 14 (cancellations) which provide for oppositions by any person “who believes that he would be damaged … including as a result of dilution,” and for cancellations “by any person who believes that he is or will be damaged, including as a result of dilution.” As a result of these changes, the Board has concluded that Congress intended to allow Board proceedings based upon a showing of a likelihood of dilution.

The Board so held in a pre- Moseley decision, Toro Co. v. ToroHead Inc. , 61 USPQ2d 1164 (TTAB 2001). Toro was an opposition proceeding in which the opposer, Toro Company, owned federal registrations for the mark TORO for lawn mowers, turf tractors, sprinkling systems, and other machines for landscape care. Toro Company opposed the ITU application to register the mark “ToroMR” combined with a bull's head design for “very low reluctance, thin film magnetic reading and writing heads for sale to OEM manufacturers of high performance computer disk drives.” Toro Company provided extensive evidence of its continuous use of the TORO mark since 1914, advertising expenditures of $35 million to $40 million annually in a variety of media, a network of 3000 dealers worldwide, and annual sales in excess of $1.3 billion a year. The TTAB found that general sales and advertising figures were insufficient to establish that the TORO mark was famous and distinctive. Thus, the mark was not eligible for protection under the FTDA. Although Toro did not find dilution, it established a likelihood of dilution standard for oppositions against ITU applications. The Board reasoned that if it required an opposer to prove actual dilution, then most trademark owners would not be able to prevail on a dilution claim in an opposition against an ITU application. Toro, 61 USPQ2d at 1174.

But did the likelihood of dilution standard from Toro remain standing after Moseley? This question was answered affirmatively in a recent post-Moseley decision, NASDAQ Stock Market, Inc. v. Antartica, S.R.L., 2003 WL 22021943 (TTAB 2003). In NASDAQ, an Italian sporting goods company sought to register, via an ITU application, a design mark featuring the word NASDAQ and a stylized red griffon without use under section 44 of the Lanham Act, for safety helmets for bicycling, motorcycling and skiing, sport clothing and goggles, various ski equipment and various exercise equipment. The NASDAQ Stock Market, Inc. opposed the registration, alleging both likelihood of confusion and likelihood of dilution. The opposer owned a registration for the mark NASDAQ on the Principal Register for “listing of securities for quotation for sale or information purposes.”

Before it addressed the merits of the dilution claim, the Board acknowledged Moseley and considered the impact of the Supreme Court's ruling. Distinguishing opposition and cancellation proceedings from civil actions, the TTAB held that the owner of a famous mark may prevail in an opposition or cancellation proceeding against an ITU application based upon a showing of a mere “likelihood” of dilution. The Board noted that although Congress intended actual dilution to be a prerequisite to judicial relief, Congress also intended that a different standard be employed when deciding the right to register a mark based on intent to use, for the reasons previously stated. Although the opposition was sustained and registration refused based on a likelihood of confusion, the TTAB also sustained the opposition based on opposer's claim of dilution, ie, the likelihood that the Italian company's NASDAQ mark would dilute opposer's inherently distinctive and famous trademark.

Toro and NASDAQ establish that an opposition proceeding can be sustained based upon a likelihood of dilution standard for ITU applications. But what about oppositions against use-based applications? Moseley dictates that the standard should be actual dilution and it appears that the TTAB agrees. Pep Boys Manny, Moe & Jack of California v. Cherng Lian, 2003 TTAB Lexis 190 (TTAB April 16, 2003). In framing the issues, the TTAB considered: 1) whether opposer's PEP BOYS marks were famous and distinctive and, if so, 2) whether applicant's use of its mark began after opposer's marks had become famous and 3) whether such use causes dilution of the distinctive quality of opposer's mark. The Board found that applicant's mark ROAD BOY was so different that it could not cause dilution of the distinctive quality of any of opposer's PEP BOYS marks. Although not citable as precedent, this post-Moseley decision by the TTAB suggests that actual dilution is the standard in oppositions against use-based applications.

What Are the Ramifications of these Decisions for Trademark Owners?

Relief. While the “likely” standard in TTAB proceedings involving ITU applications is lower than the “actual” standard in civil actions, so is the allowable relief. A finding of dilution in a TTAB proceeding only prevents registration, not use. Nevertheless, in addition to likelihood of confusion, dilution remains a viable option as a basis for an opposition proceeding for owners of famous marks to prevent registration of “potentially” damaging marks, ie, a mark which is the subject of an ITU application. The lesser standard in TTAB proceedings may encourage owners of famous marks to pursue relief based on dilution, thereby increasing the number of dilution claims in oppositions.

Clearance Searches. These decisions also change the scope of clearance searches conducted prior to registering a mark. When conducting clearance searches for proposed new marks and filing ITU applications, consideration should also be given to whether an application for registration of the proposed new mark, even though not in use, may be opposed based on a “likelihood” of dilution standard. The scope of searches should be broader than merely focusing on related classes to assess likelihood of confusion. Dilution should also be evaluated by expanding the search to include marks in unrelated classes for unrelated goods.

The Bottom Line. Depending on the circumstances, TTAB proceedings may provide a simpler and more economical way to initiate and pursue a dilution claim against an ITU application. The trademark owner and the applicant are both likely to be guided by a TTAB decision, which might be rendered before an applicant invests significant resources in using the mark, and before dilution of the owner's mark occurs in the marketplace. Ultimately, the lesser burden of proof in the TTAB allows greater opportunity for an owner of a famous mark to attack ITU marks that can damage their own famous mark and good will associated with it.