Before enactment of the Federal Trademark Dilution Act of 1995 (the "Act"), the only protection available for famous marks was under state legislation. The concept of trademark dilution was introduced in a law review article in 1927.  The federal Act effectively preempts existing state dilution acts for most famous marks. The federal Act expands the scope of protection for famous and distinctive trademarks beyond likelihood of confusion to protect the owner of a famous mark against either blurring or tarnishment by unauthorized third party use. The legislative history of the Act states that "[c]onfusion leads to immediate injury, while dilution is an infection, which if allowed to spread, will inevitably destroy the advertising value of the mark."
What Is "famous"?
Unfortunately, the term famous is not defined in the Act. As a result, it is up to the court to determine whether a mark is famous. As a practical matter, any test to determine whether a mark is famous, will necessarily be subjective, with the possibility of inconsistent decisions by different courts. Under the Act, courts should consider the following factors in determining whether a mark is famous:
- The duration and extent of use of the mark;
- The duration and extent of advertising for the mark;
- The geographic area in which the mark has been used;
- The degree of distinctiveness of the mark (either through the nature of the mark itself, or through acquired distinctiveness);
- The degree of recognition of the mark;
- The method by which the product was distributed and marketed (the "channels of trade");
- The use of the mark by third parties; and
- Whether the mark is federally registered.
The most important factor considered by courts is the length of time the party has used the mark.
Examples of marks which are clearly "famous" include XEROX, KODAK, COCA-COLA, and REEBOK.
What is dilution?
Once a trademark owner has established that its mark is "famous," it must prove that "another person's commercial use in commerce of a mark or trade name . . .causes dilution of the distinctive quality of the mark."  Dilution differs from normal trademark infringement in that it is neither necessary to prove likelihood of confusion nor to show competition between the goods of the plaintiff and those of the defendant. Instead, all that is required is that the use of a "famous" mark by a third party causes dilution of the "distinctive quality" of the mark.
Dilution means "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."
|“||In order to prove a violation of the . . . Act, a plaintiff must show that (1) the mark is famous; (2) the defendant is making a commercial use of the mark in commerce; (2) the defendant's use began after the mark became famous; and (4) the defendant's use of the mark dilutes the quality of the mark by diminishing the capacity of the mark to identify and distinguish goods and services.||”|
Dilution claims are can brought when the defendant's use of the mark causes either:
- Blurring, which "occurs when a defendant uses a plaintiff's trademark to identify the defendant's goods or services, creating the possibility that the mark will lose its ability to serve as a unique identifier of the plaintiff's product." The concept of blurring is governed by a six factor test: (1) similarity of the marks; (2) similarity of the products covered; (3) sophistication of the consumers; (4) predatory intent; (5) renown of the senior mark; (6) renown of the junior mark.
- Tarnishment, which "occurs when a famous mark is improperly associated with an inferior or offensive product or service." Tarnishment may be found where (1) the plaintiff's mark has been linked, by the defendant's conduct, to unwholesome, unsavory or shoddy quality products; and (2) as a result, consumers are likely to associate the lack of prestige or quality of such products with the plaintiff's unrelated goods.
However, at least one court has held that there may be dilution where there is neither blurring or tarnishment, as long as the defendant's actions "lessening the capacity of a famous mark to identify and distinguish goods or services."
Not all actions are subject to the provisions of the Act. The Act specifies that fair use (such as comparative advertising), non-commercial use, and all forms of news reporting and news do not constitute dilution under the Act.
In most cases, the only remedy available under the Act is an injunction against further dilution. However, if the plaintiff can show that the defendant willfully sought to "trade on the owner's reputation or to cause dilution of the mark," the plaintiff may be able to recover defendant's profits; any damages sustained by the plaintiff; the costs of the action, the destruction of infringing articles and, in exceptional cases, reasonable attorneys' fees.
Application to domain name disputes
Because there are millions of websites, each of which must have a unique domain name, it is difficult for users to find the website they are seeking unless they know the domain name. While search engines exist to help users find the web site they are looking for, these search engines are not totally effective and are slow. As a result, web site owners want to have "easy to remember" domain names.
Since domain name registration has traditionally been done on a first come, first served basis, many famous trademarks were registered early on, either intentionally by so-called cybersquatters or innocently by website owners looking for a memorable domain name.
The first was an action for trademark infringement and unfair competition, which required proof that defendant's use of the domain name was likely to be confused with the trademark owner's use of the mark, or that consumers were likely to believe that the source or sponsorship of the trademarked goods or services and the website were the same. In most cases, this was a difficult claim to prove, since the domain name use was not always a trademark or service mark use. Often the domain name was used only to identify the site, in much the same manner as a telephone number. Other times, the subject matter displayed on the website was so different from the goods or services offered by the trademark owner that it was highly unlikely that a consumer would believe the trademark owner sponsored the website.
Second, a trademark owner could rely on a state anti-dilution statute, and common law dilution. To prevail in a claim for dilution, the trademark owner has to show that its mark was being "whittled away" by the domain name usage. State claims were often ineffective since only 25 states have such statutes, courts generally will not grant injunctive relief outside their jurisdiction; it may be difficult to obtain jurisdiction over a website owner, and a complete defense to a state dilution claim is ownership of a federal registration for the mark.
Two domain name cases decided under the Act illustrate its utility. In the first case, the court enjoined the defendant from using "candyland.com" for a sexually explicit website, or any similar name which is "likely to dilute" the value of Hasbro's CANDYLAND trademark. The court relied exclusively on Hasbro's U.S. trademark registration for CANDYLAND, which occurred in 1951.
In Intermatic Inc. v. Toeppen, a Magistrate recommended summary judgment against the use of the domain name "intermatic.com" based on the Act. The Magistrate found that "Intermatic" was a "strong, federally registered mark which has been exclusively used by Intermatic for over fifty years." While the defendant's website was non-commercial, since no goods or services were offered through the site, the Magistrate found that the defendant's "intention" to sell the domain name constituted a commercial use, bringing his use of the mark within the Act. He found that the defendant's desire to resell the domain name met the commercial use requirement of the Act. The magistrate found two separate instances of dilution. First, the use of the "intermatic.com" domain name by the defendant lessened the capacity of the plaintiff to identify and distinguish its goods or services on the Internet. He noted that the Internet allows only one "intermatic.com", domain name, and the defendant's registration "effectively enjoined" Intermatic's use of the trademark as a domain name, and consequently diluted the Intermatic mark's identification with Intermatic's goods.
Second, the defendant's conduct diluted the trademark by blurring. The defendant's registration of "intermatic.com" diluted the Intermatic mark simply by coexisting with it, even on noncompeting goods. "[T]he continuous use of a mark similar to plaintiff's works an inexorably adverse effect upon the distinctiveness of the mark," since the domain name would appear on almost all of the defendant's Internet pages. After time, the mere existence of "intermatic.com" on these pages would "destroy the advertising value of the mark."
- See, e.g., Frank Schechter, The Rational Basis of Trademark Protection, 40 Harv. L. Rev. 813 (1927). By 1985, 25 states had trademark anti-dilution statutes. It is unclear what value these state statutes retain after the Act, since the federal Act specifically states that federally registered marks are no longer the subject of state law dilution claims.
- 15 U.S.C. § 1125(c)(1) (A)-(H).
- 15 U.S.C. § 1127.
- Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1324, 46 U.S.P.Q.2d (BNA) 1511 (9th Cir. 1998)(full-text).
- Id. at 1326 n.7.
- See Hormel Foods Corp. v. Jim Henson Products Inc., 73 F.3d 497, 507, 37 U.S.P.Q.2d (BNA) 1516 (2d Cir. 1996)(full-text). "The sine qua non of tarnishment is a finding that plaintiff's mark will suffer negative associations through defendant's use." Id.
- Id. at 1326.
- Hasbro Inc. v. Internet Entertainment Group Ltd., 40 U.S.P.Q.2d (BNA) 1479, 1996 WL 84853 (W.D. Wash. Feb. 9, 1996).
- 947 F. Supp. 1227, 40 U.S.P.Q.2d (BNA) 1412 (N.D. Ill. 1996)(full-text).