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Newsletters and Bulletins / February 1996 / Federal Dilution
 

Federal Dilution Trademark Law in the United States

Contents


Effectve date

The Federal Trademark Dilution Act of 1995, which protects famous marks from uses that dilute their distinctiveness, even in the absence of any likelihood of confusion or competition, became effective on January 16, 1996.

Summary & Guidelines

The new law sets forth guidelines to determine which marks are distinctive and famous and lists the following, non-exclusive factors:

(1) the degree of inherent or acquired distinctiveness of the mark;

(2) the duration and extent of use of the mark;

(3) the duration and extent of advertising and publicity;

(4) the geographical extent of the trading area in which the mark is used;

(5) the channels of trade;

(6) the degree of recognition of the mark in the trading areas and channels of trade used by the mark's owner and the person against whom the injunction is sought;

(7) the nature and extent of use of the same or similar marks by third parties; and

(8) whether the owner of the mark has a valid federal registration.

Notwithstanding this last factor, both registered and unregistered marks may be protected under this law.

Definitiion of Dilutiuon

The new act defines the term "dilution" as "the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of

(1) competition between the owner of the famous mark and other parties, or

(2) likelihood of confusion, mistake, or deception."

Courts have previously found that dilution can occur as a result of either "blurring" or "tarnishment". "Blurring" typically refers to the "whittling away" of distinctiveness caused by the unauthorized use of a mark on dissimilar products; while "tarnishment" involves an unauthorized use of a mark which links it to products that are of poor quality or which is portrayed in an unwholesome or unsavory context that is likely to reflect adversely upon the owner's product. The legislative history suggests that both of these concepts are encompassed within the new law. In addition, the legislative history cites, as examples of the uses which would fall within the new law, the mark DUPONT for shoes, BUICK for aspirin and KODAK for pianos.

Remedy - Injunctive Relief

Ordinarily, only injunctive relief is available under the new law. However, if the defendant willfully intended to trade on the owner's reputation or to cause dilution of the famous mark, the owner of that mark may also be entitled to other remedies available under the United States Trademark Act, including defendant's profits, damages, attorneys' fees, and destruction of the infringing goods. The availability of monetary relief is a striking departure from state dilution laws, which have typically provided only for injunctive relief. Interestingly, the new law also provides that the ownership of a valid federal registration is a complete bar to the assertion of a dilution claim under state law, thereby effectively pre-empting state dilution laws.

First Amendment Concerns

In response to legitimate First Amendment concerns, the new law expressly exempts certain uses of a famous mark, in particular:

(1) "fair use" of a mark in the context of comparative commercial advertising or promotion;

(2) non-commercial uses, such as parody, satire and editorial commentary; and

(3) all forms of news reporting and news commentary.

Conclusions

Although approximately 25 states have already enacted laws that prohibit trademark dilution, this new federal law is intended to provide uniform and nationwide protection for famous marks. Thus, the new law renders academic the unsettled question of whether a state dilution claim can support injunctive relief against use in another state in which there is no dilution statute. Nevertheless, what constitutes a "famous" mark is likely to generate controversy in the courts and in the Trademark Office and may well slow the trademark clearance and registration process, as parties seek to settle what constitutes a "famous" mark. In addition, courts have traditionally dismissed state dilution claims unless there is also a finding of infringement or unfair competition based upon a likelihood of confusion. It remains to be seen how courts and the Trademark Office will interpret this new federal law, which has potentially far-reaching applications.

 

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