Trademark Dilution: When 'Minimally Similar' May Be Similar Enough

The TDRA defines dilution by blurring as an “association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark.” 15 U.S.C. ' 1125(c)(2)(B). In considering the rather amorphous “impairment” concept, the Act provides courts with a non-exclusive list of six factors to consider: 1) the degree of similarity between the marks, 2) the degree of inherent or acquired distinctiveness of the famous mark, 3) the extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark, 4) the degree of recognition of the famous mark, 5) whether the user of the junior mark intended to create an association with the famous mark, and 6) any actual association between the junior mark and the famous mark. Id.

Applying this multi-factor test, the district court found against Starbucks on its dilution claim. As to the similarity factor, the court, citing a case decided under New York's anti-dilution statute, determined that “'to establish dilution by blurring, the two marks must not only be similar, they must be 'very' or 'substantially' similar.'” Starbucks Corp. v. Wolfe's Borough Coffee, Inc., 559 F. Supp. 2d 472, 477 (S.D.N.Y. 2008) (quoting Hormel Foods Corp., 73 F.3d 497, 503 (2d Cir. 1996)). Having set this high bar, the district court found that “Starbucks” and “Mr. Charbucks” (or “Charbucks Blend”) for coffee products were not substantially similar, particularly in light of the way each mark was presented to consumers in the marketplace. It further ruled that this “dissimilarity alone is sufficient to defeat Plaintiff's blurring claim ' and in any event, this factor at a minimum weighs strongly against Plaintiff in the dilution analysis.” Id. at 477.

The similarity standard applied by the district court was not new. The Second Circuit had applied the same standard to cases decided under the Federal Trademark Dilution Act (“FTDA”), the pre-TDRA version of the federal dilution statute. See, e.g., Playtex Products, Inc. v. Georgia-Pacific Corp., 390 F.3d 158, 167 (2d Cir. 2004) (“A plaintiff cannot prevail on a state or federal dilution claim unless the marks at issue are 'very' or 'substantially similar.'”). Moreover, even after the enactment of the TDRA, courts in several other circuits had applied a heightened “similarity” standard to cases decided under the new Act. For example, the U.S. Court of Appeals for the Ninth Circuit, in Jada Toys, Inc. v. Mattel, Inc., applied an “identical, or nearly identical” standard in determining whether the alleged diluter was “making use of the mark in commerce,” as required under Ninth Circuit precedent. Jada Toys, 518 F.3d 628, 634 (9th Cir. 2008) (“In order to be nearly identical, two marks 'must be “similar enough that a significant segment of the target group of customers sees the two marks as essentially the same.”'”); see also Visa Int'l Service Assoc. v. JSL Corp., 590 F. Supp. 2d 1306, 1316 (D. Nev. 2008) (noting that the court was constrained to apply the “identical or nearly identical” test even though the TDRA's “degree of similarity” factor “would appear to abrogate the judicial gloss put upon the commercial use element ' “). So, too, did a Western District of Kentucky court in V Secret Catalogue, Inc. v. Moseley, 558 F. Supp. 2d 734, 744 (W.D. Ky. 2008) (requiring that the marks be “identical,” “nearly identical” or “substantially similar,” and noting that “[w]hile the TDRA does not require that the marks be 'identical' or 'nearly identical,' it does not appear that the Act eliminated this requirement previously established in the law.”) While the stricter similarity standard is not expressly set forth in the TDRA ' or, for that matter, in the FTDA ' some courts continued to rely upon it to limit the circumstances under which a mark owner could prevail on a federal dilution claim.

Discarding the 'Substantially Similar' Requirement

In its Starbucks decision, the Second Circuit did not take issue with the district court's factual finding on the similarity issue. It acknowledged the differences in the marks at issue, as well as in the product packaging and accompanying house marks, and found that the district court “did not clearly err in finding that the Charbucks Marks were minimally similar to the Starbucks Marks.” Starbucks, 588 F.3d at 106-07. The appellate court, however, held that the district court “erred to the extent it required 'substantial' similarity between the marks.” Id. at
107. The court acknowledged that previous circuit case law had required that the marks at issue be “very” or “substantially” similar in order to prevail on both federal and state dilution claims. Id. at 107-08. Application of this heightened standard to federal claims, the court reasoned, “can likely be attributed to the lack of guidance under the former federal statute and the existence of a 'substantially similar' requirement under state dilution statutes, which were better defined[.]” Id. at 108.

In considering the TDRA, however, the court noted that the Act:

provides us with a compelling reason to discard the 'substantially similar' requirement for federal trademark dilution actions. The current federal statute defines dilution by blurring as an 'association arising from the similarity between a mark ' and a famous mark that impairs the distinctiveness of the famous mark,' and the statute lists six non-exhaustive factors for determining the existence of an actionable claim for blurring. ' Although 'similarity' is an integral element in the definition of 'blurring,' we find it significant that the federal dilution statute does not use the words 'very' or 'substantial' in connection with the similarity factor to be considered in examining a federal dilution claim.

Id. Moreover, the court reasoned, “[c]onsideration of a 'degree' of similarity as a factor in determining the likelihood of dilution does not lend itself to a requirement that the similarity between the subject marks must be 'substantial' for a dilution claim to succeed.” It noted that if the court enforced such a requirement, “the significance of the remaining five factors would be materially diminished because they would have no relevance unless the degree of similarity between the marks are initially determined to be 'substantial.'” Id. Accordingly, the court found, “[t]he existence of some ' but not substantial ' similarity between the subject marks may be sufficient in some cases to demonstrate a likelihood of dilution by blurring.” Id. at 107 n.3.

An Unclear Effect

It is unclear, in practice, what effect the lesser “similarity” standard will have on dilution cases decided under the TDRA. Even where marks are very similar, courts still must consider whether there is an “actual association” between the marks, as well as the ultimate issue of impairment of the famous mark's distinctive significance. TDRA cases suggest that some courts expect a survey to prove one or both of these facts, and the courts have been unclear as to exactly what type of survey will do. Even so, the Second Circuit has clearly signaled that, in the proper case, a court could find dilution by blurring even where the marks are only “minimally similar.”

What is the proper case? Perhaps at one extreme is Miss Universe, L.P., LLLP v. Villegas, 2009 U.S. Dist. LEXIS 114886 (S.D. N.Y. Dec. 9, 2009), a Southern District of New York case decided just six days after Starbucks. There, the court rejected a dilution claim where it found that “Miss USA” and “Miss Asia USA” were only “somewhat similar,” and where it further found that “Miss USA” was only moderately distinctive, that plaintiff had failed to show that defendant intended to “foster associations with 'Miss USA'[,]” and that plaintiff failed to offer a survey on the “ actual association” issue. Id. at *38-43. Clearly, the court believed, this was not the proper case for extending dilution protection to marks that were only marginally similar. Miss Universe suggests that where marks are only “somewhat” similar, a trademark owner will need to present substantial evidence ' usually through a survey ' of “actual association” between the junior and senior marks.

Resolution of Starbucks May Provide Helpful Guidance

Further down the spectrum is the Starbucks case, which the Second Circuit sent back to the district court for application of the revised dilution standard. Particularly in light of other dilution factors considered by the Second Circuit, the case's ultimate resolution could provide helpful guidance as to how the TDRA will be applied. For example, the Second Circuit found that the district court erred in applying the “intent to associate” factor, noting that, even though Black Bear did not act in bad faith, the district court's finding that Black Bear intended to associate Charbucks with Starbucks made this factor weigh in Starbucks' favor. Starbucks, 588 F.3d at 109. Moreover, in considering the “actual association” factor, the appellate court found error in the lower court's treatment of a survey which showed that 30.5% of respondents answered “Starbucks” when asked the question: “[w]hat is the first thing that comes to mind when you hear the name 'Charbucks.'” Id. In rejecting Starbucks' “actual association” claim, the district court had suggested that “actual confusion” is necessary to support a dilution claim when, in fact, such evidence is not relevant to a dilution analysis. Id.

Accordingly, it is clear that at least four of the six dilution factors favor Starbucks (the degree of inherent or acquired distinctiveness; the extent to which the trademark owner is engaging in substantially exclusive use of the mark; the degree of recognition of the famous mark; and the defendant's intent to create an association with the famous mark). Id. at 106-109. A fifth factor ' “actual association” ' may well favor Starbucks, too, and the sixth factor ' similarity ' at least meets the threshold of similarity necessary to support a dilution claim. If the district court ultimately finds in Starbucks' favor, it would suggest that proving a likelihood of dilution where the marks at issue are found to be only “minimally similar” is something more than a theoretical pipe dream. A Starbucks' loss, however, could indicate that, while “minimal similarity” may meet the threshold requirement for proving a dilution claim, the path to success in such instances is exceedingly narrow.

Michael A. Bucci is a partner in Day Pitney LLP's Intellectual Property Department and practices out of the firm's Hartford, CT office. He can be reached at 860-275-0523, or by e-mail at [email protected].

When Congress enacted the Trademark Dilution Revision Act of 2006 (“TDRA”), the big news was the re-establishment of “likelihood of dilution” as the applicable test for a federal dilution claim. Few, if any, commentators suggested that the TDRA lowered the standard of similarity necessary to prove a dilution claim, and for the first three years of the Act's existence, courts generally treated the standard as if it had not been modified at all.

The Latest 'Coffee War' Decision

That changed late last year, however, when the U.S. Court of Appeals for the Second Circuit penned the latest decision in the long-running “coffee war” between Starbucks Corporation and Wolfe's Borough Coffee, Inc. d/b/a Black Bear Micro Roastery (“Black Bear”). In Starbucks Corp. v. Wolfe's Borough Coffee, Inc. , 588 F.3d 97 (2d Cir. 2009), the Second Circuit rejected the district court's determination ' based on pre-TDRA case law ' that trademark owners must show “substantial similarity” between the trademarks at issue in order to prevail on a dilution by blurring claim under the TDRA. Citing the language of the TDRA, the appellate court found that the new statute required only “similarity,” and that even “minimal similarity” could, in the proper case, suffice to support a claim.

The TDRA defines dilution by blurring as an “association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark.” 15 U.S.C. ' 1125(c)(2)(B). In considering the rather amorphous “impairment” concept, the Act provides courts with a non-exclusive list of six factors to consider: 1) the degree of similarity between the marks, 2) the degree of inherent or acquired distinctiveness of the famous mark, 3) the extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark, 4) the degree of recognition of the famous mark, 5) whether the user of the junior mark intended to create an association with the famous mark, and 6) any actual association between the junior mark and the famous mark. Id.

Applying this multi-factor test, the district court found against Starbucks on its dilution claim. As to the similarity factor, the court, citing a case decided under New York's anti-dilution statute, determined that “'to establish dilution by blurring, the two marks must not only be similar, they must be 'very' or 'substantially' similar.'” Starbucks Corp. v. Wolfe's Borough Coffee, Inc. , 559 F. Supp. 2d 472, 477 (S.D.N.Y. 2008) (quoting Hormel Foods Corp. , 73 F.3d 497, 503 (2d Cir. 1996)). Having set this high bar, the district court found that “Starbucks” and “Mr. Charbucks” (or “Charbucks Blend”) for coffee products were not substantially similar, particularly in light of the way each mark was presented to consumers in the marketplace. It further ruled that this “dissimilarity alone is sufficient to defeat Plaintiff's blurring claim ' and in any event, this factor at a minimum weighs strongly against Plaintiff in the dilution analysis.” Id. at 477.

The similarity standard applied by the district court was not new. The Second Circuit had applied the same standard to cases decided under the Federal Trademark Dilution Act (“FTDA”), the pre-TDRA version of the federal dilution statute. See, e.g., Playtex Products, Inc. v. Georgia-Pacific Corp. , 390 F.3d 158, 167 (2d Cir. 2004) (“A plaintiff cannot prevail on a state or federal dilution claim unless the marks at issue are 'very' or 'substantially similar.'”). Moreover, even after the enactment of the TDRA, courts in several other circuits had applied a heightened “similarity” standard to cases decided under the new Act. For example, the U.S. Court of Appeals for the Ninth Circuit, in Jada Toys, Inc. v. Mattel, Inc., applied an “identical, or nearly identical” standard in determining whether the alleged diluter was “making use of the mark in commerce,” as required under Ninth Circuit precedent. Jada Toys , 518 F.3d 628, 634 (9th Cir. 2008) (“In order to be nearly identical, two marks 'must be “similar enough that a significant segment of the target group of customers sees the two marks as essentially the same.”'”); see also Visa Int'l Service Assoc. v. JSL Corp. , 590 F. Supp. 2d 1306, 1316 (D. Nev. 2008) (noting that the court was constrained to apply the “identical or nearly identical” test even though the TDRA's “degree of similarity” factor “would appear to abrogate the judicial gloss put upon the commercial use element ' “). So, too, did a Western District of Kentucky court in V Secret Catalogue, Inc. v. Moseley , 558 F. Supp. 2d 734, 744 (W.D. Ky. 2008) (requiring that the marks be “identical,” “nearly identical” or “substantially similar,” and noting that “[w]hile the TDRA does not require that the marks be 'identical' or 'nearly identical,' it does not appear that the Act eliminated this requirement previously established in the law.”) While the stricter similarity standard is not expressly set forth in the TDRA ' or, for that matter, in the FTDA ' some courts continued to rely upon it to limit the circumstances under which a mark owner could prevail on a federal dilution claim.

Discarding the 'Substantially Similar' Requirement

In its Starbucks decision, the Second Circuit did not take issue with the district court's factual finding on the similarity issue. It acknowledged the differences in the marks at issue, as well as in the product packaging and accompanying house marks, and found that the district court “did not clearly err in finding that the Charbucks Marks were minimally similar to the Starbucks Marks.” Starbucks, 588 F.3d at 106-07. The appellate court, however, held that the district court “erred to the extent it required 'substantial' similarity between the marks.” Id. at
107. The court acknowledged that previous circuit case law had required that the marks at issue be “very” or “substantially” similar in order to prevail on both federal and state dilution claims. Id. at 107-08. Application of this heightened standard to federal claims, the court reasoned, “can likely be attributed to the lack of guidance under the former federal statute and the existence of a 'substantially similar' requirement under state dilution statutes, which were better defined[.]” Id. at 108.

In considering the TDRA, however, the court noted that the Act:

provides us with a compelling reason to discard the 'substantially similar' requirement for federal trademark dilution actions. The current federal statute defines dilution by blurring as an 'association arising from the similarity between a mark ' and a famous mark that impairs the distinctiveness of the famous mark,' and the statute lists six non-exhaustive factors for determining the existence of an actionable claim for blurring. ' Although 'similarity' is an integral element in the definition of 'blurring,' we find it significant that the federal dilution statute does not use the words 'very' or 'substantial' in connection with the similarity factor to be considered in examining a federal dilution claim.

Id. Moreover, the court reasoned, “[c]onsideration of a 'degree' of similarity as a factor in determining the likelihood of dilution does not lend itself to a requirement that the similarity between the subject marks must be 'substantial' for a dilution claim to succeed.” It noted that if the court enforced such a requirement, “the significance of the remaining five factors would be materially diminished because they would have no relevance unless the degree of similarity between the marks are initially determined to be 'substantial.'” Id. Accordingly, the court found, “[t]he existence of some ' but not substantial ' similarity between the subject marks may be sufficient in some cases to demonstrate a likelihood of dilution by blurring.” Id. at 107 n.3.

An Unclear Effect

It is unclear, in practice, what effect the lesser “similarity” standard will have on dilution cases decided under the TDRA. Even where marks are very similar, courts still must consider whether there is an “actual association” between the marks, as well as the ultimate issue of impairment of the famous mark's distinctive significance. TDRA cases suggest that some courts expect a survey to prove one or both of these facts, and the courts have been unclear as to exactly what type of survey will do. Even so, the Second Circuit has clearly signaled that, in the proper case, a court could find dilution by blurring even where the marks are only “minimally similar.”

What is the proper case? Perhaps at one extreme is Miss Universe, L.P., LLLP v. Villegas, 2009 U.S. Dist. LEXIS 114886 (S.D. N.Y. Dec. 9, 2009), a Southern District of New York case decided just six days after Starbucks. There, the court rejected a dilution claim where it found that “Miss USA” and “Miss Asia USA” were only “somewhat similar,” and where it further found that “Miss USA” was only moderately distinctive, that plaintiff had failed to show that defendant intended to “foster associations with 'Miss USA'[,]” and that plaintiff failed to offer a survey on the “ actual association” issue. Id. at *38-43. Clearly, the court believed, this was not the proper case for extending dilution protection to marks that were only marginally similar. Miss Universe suggests that where marks are only “somewhat” similar, a trademark owner will need to present substantial evidence ' usually through a survey ' of “actual association” between the junior and senior marks.

Resolution of Starbucks May Provide Helpful Guidance

Further down the spectrum is the Starbucks case, which the Second Circuit sent back to the district court for application of the revised dilution standard. Particularly in light of other dilution factors considered by the Second Circuit, the case's ultimate resolution could provide helpful guidance as to how the TDRA will be applied. For example, the Second Circuit found that the district court erred in applying the “intent to associate” factor, noting that, even though Black Bear did not act in bad faith, the district court's finding that Black Bear intended to associate Charbucks with Starbucks made this factor weigh in Starbucks' favor. Starbucks, 588 F.3d at 109. Moreover, in considering the “actual association” factor, the appellate court found error in the lower court's treatment of a survey which showed that 30.5% of respondents answered “Starbucks” when asked the question: “[w]hat is the first thing that comes to mind when you hear the name 'Charbucks.'” Id. In rejecting Starbucks' “actual association” claim, the district court had suggested that “actual confusion” is necessary to support a dilution claim when, in fact, such evidence is not relevant to a dilution analysis. Id.

Accordingly, it is clear that at least four of the six dilution factors favor Starbucks (the degree of inherent or acquired distinctiveness; the extent to which the trademark owner is engaging in substantially exclusive use of the mark; the degree of recognition of the famous mark; and the defendant's intent to create an association with the famous mark). Id. at 106-109. A fifth factor ' “actual association” ' may well favor Starbucks, too, and the sixth factor ' similarity ' at least meets the threshold of similarity necessary to support a dilution claim. If the district court ultimately finds in Starbucks' favor, it would suggest that proving a likelihood of dilution where the marks at issue are found to be only “minimally similar” is something more than a theoretical pipe dream. A Starbucks' loss, however, could indicate that, while “minimal similarity” may meet the threshold requirement for proving a dilution claim, the path to success in such instances is exceedingly narrow.

Michael A. Bucci is a partner in Day Pitney LLP's Intellectual Property Department and practices out of the firm's Hartford, CT office. He can be reached at 860-275-0523, or by e-mail at [email protected].