In Thane International v. Trek Bicycle Corporation, the United States Court of Appeals for the Ninth Circuit clarified the concept of fame within a niche market for purposes of supporting a claim under the Federal Trademark Dilution Act.

Trek opposed Thane’s application to register the mark ORBITREK for “stationary elliptical exercise machines,” alleging confusing similarity with its registered mark TREK for bicycles and stationary exercise cycles. Thane responded by requesting a jury trial in federal district court seeking a declaration that it had not violated state and federal trademark laws, including both the confusing similarity and federal antidilution sections of the Lanham Act. The district court granted Thane’s motion for summary judgment, which Trek appealed.

Under the Lanham Act the owner of a famous mark may seek to enjoin another person’s commercial use of a mark, if such use commences after the mark has become famous and causes “dilution” of the distinctive quality of the mark. Dilution is defined 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.” The statute also sets out factors to determine whether a mark is sufficiently distinctive and famous to warrant a finding of dilution, including the degree of inherent or acquired distinctiveness of the mark; the duration and extent of use of the mark, and the duration and extent of advertising and publicity of the mark.

According to the Ninth Circuit, the district court’s dilution analysis incorrectly focused on the likelihood of consumer confusion between the marks, which is clearly irrelevant to a finding of dilution under the statute. Instead, the court set forth two broad areas of consideration necessary for a dilution claim, namely, identity and fame. First, the marks at issue must be identical, or nearly identical, such that a significant segment of the target group of consumers would see the marks as essentially the same. Although the marks TREK and ORBITREK are not identical, the court noted that Thane’s actual use of its mark as “OrbiTrek” incorporated the term TREK as a separate, visually identifiable element which a reasonable consumer might view as essentially identical to Trek’s mark. As such, the issue of identity was not appropriately decided on summary judgment.

With respect to the fame requirement, the court stressed that dilution is a cause of action invented and reserved for a select class of truly prominent, distinctive and renowned marks with such powerful consumer associations that even non-competing uses can impinge on their value. Given the broad protection possible under the statute, and “in order not to upset the balance in favor of over-protecting trademarks, at the expense of potential non-infringing uses,” the court warned that a finding of dilution must be limited to marks that have become “household names” among the general purchasing public.

Nonetheless, the court grudgingly acknowledged its earlier opinion in Avery Dennison Corp. v. Sumpton, which held that “niche” fame within a limited geographic area or a specialized market segment may support a claim of dilution occurring within that niche. However, in order to maintain coherence in relation to the level of fame generally required for a dilution claim, the court emphasized that niche fame must be concentrated in a highly specialized market segment with an identifiable customer base. In other words, consumers within the niche must be likely to make associations between marks that the general public would not make.

Applied to the facts in this case, the Ninth Circuit concluded that Thane’s elliptical exercise machines and Trek’s stationary exercise bicycles could be said to move within the same market niche. However, the court reasoned that elliptical exercise machines and mobile bicycles do not operate in the same narrow market segment for purposes of niche fame, despite their common use for exercise. Thus, the smallest market shared by such goods is the sporting goods market, which “is a widely diverse market that encompasses everything from football helmets to ice skates”. The court concluded that a market of this nature is not properly considered a niche market since participants cannot reasonably be expected to have any particular knowledge about products in sub-markets in which they do not participate.

Although Trek provided clear evidence of fame within the mobile bicycle market, the company admitted that it had ceased manufacturing stationary exercise machines approximately at the time Thane began offering OrbiTrek machines. Given the lack of successful, long-term development of its mark within the exercise machine niche market, the court determined that a finding of fame for the TREK mark within that specialized market would be inconsistent with the purpose of antidilution protection.

The court then considered whether Trek’s use of its mark supported a general claim of fame outside a niche market. Evidence of widespread consumer exposure to Trek’s mark in connection with images of U.S. cycling champion Lance Armstrong in newspapers and on cereal boxes was discounted as merely “incidental”. According to the court, such promotion does not lead to the conclusion that the TREK mark has become part of the collective national consciousness. Similarly, evidence of broad-based mass advertising was dismissed on the rationale that it merely proved that Trek desires widespread fame, not that it has achieved it. More suitable evidence of widespread fame was said to include surveys showing a large percentage of public recognition or pop culture references involving the brand. However, the court cautioned that such evidence still may not support a suggestive trademark such as TREK, which is not highly distinctive, or “strong”, in connection with vehicular products.

Given the lack of evidence from which a reasonable fact-finder could find that TREK is famous among members of the general consuming public, the court concluded that summary judgment was properly granted to Thane with respect to the dilution issue. However, the case was remanded for reconsideration of the issue of likelihood of confusion.

The Ninth Circuit’s insistence that a dilution claim be supported by a showing of fame in the general marketplace or within an extremely narrow consumer segment indicates ongoing concern that broad application of the federal antidilution statute could create “rights in gross” in trademarks that are neither widely famous nor create consumer confusion. The court’s narrow delineation of market segment boundaries resembles the comparison of goods and channels of trade encountered under a standard confusing similarity analysis. Indeed, when combined with the requirement that marks subject to a dilution analysis be identical, or nearly identical, the court’s criteria for dilution within a niche market arguably encompasses the elements of a claim of confusing similarity, notwithstanding its insistence that such similarity is irrelevant to a dilution analysis.