United States: Trademark dilution and clearance

While trademark attorneys routinely assess likelihood of confusion when clearing marks, many neglect to consider likelihood of dilution, which results in an incomplete and sometimes inaccurate opinion. For example, when a start-up by the name of JSL Corp proposed using the eVISA mark for translation services, the company’s counsel opined that the mark would not violate Visa’s trademark rights in the VISA mark because JSL was not offering credit card services (see Visa v JSL, 610 F 3d 1088 (9th Cir 2010), JSL’s opening brief, Exhibit D). While the opinion addressed the likelihood of confusion, it ignored the potential that use of the eVISA mark might dilute the VISA mark’s distinctiveness. Unsurprisingly, Visa sued JSL for trademark dilution and prevailed.

Although dilution claims can be successfully asserted only by owners of famous marks, it is not always obvious which marks will qualify for protection as famous. As a result, trademark dilution should always be considered when clearing marks for use in the United States.

Overview of US dilution law

The Federal Trademark Dilution Act 1995 prohibits marks that dilute the distinctiveness of famous marks in the United States. The Trademark Dilution Revision Act 2006 established that the standard for proving dilution is likelihood of dilution, reversing the US Supreme Court’s decision establishing actual dilution as the standard and thus making dilution easier to prove (see V Moseley v V Secret Catalogue, Inc, 537 US 418 (2003)). In addition to US dilution law, approximately 40 states have their own dilution laws.

Under US dilution law, the owner of a famous mark can stop others from commencing use of a mark in commerce which is likely to dilute the famous mark, even in the absence of actual or likely confusion, competition or actual economic injury. The goods and services for which the mark will be used are irrelevant in determining likelihood of dilution.

There are two forms of dilution under US law: blurring and tarnishment. Dilution by blurring refers to 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 USC § 1125(c) (2)(B)). Thus, if someone adopts the famous NIKE mark for goods or services that are unrelated to athletic clothes and equipment, such as accounting services, the use may dilute or blur the distinctiveness of the NIKE mark such that it becomes associated with additional sources instead of a single source. Dilution by tarnishment refers to an “association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark” (15 USC §1125(c) (2)(C)). Thus, if someone adopts the NIKE mark for pornographic movies, the use may dilute the NIKE mark by tarnishing the goodwill and reputation associated with the NIKE mark.

Which marks qualify as famous?

To qualify as famous, a mark must be “widely recognized by the general consuming public of the United States” (15 USC §1125(c)(2)(A)). US courts may consider all relevant factors, including:

• the duration, extent and geographic reach of advertising and publicity for the mark;
• the amount, volume and geographic extent of sales of goods or services offered under the mark;
• the extent of actual recognition of the mark; and
• whether the mark is registered in the United States (15 USC §1125(c)(2)(A)).

Since the United States does not keep a register of well-known or famous marks, trademark attorneys must determine whether a mark is famous on a case-by-case basis.

Based on this standard, the fame of some marks is fairly obvious. While marks such as VISA, NIKE, ROLEX, STARBUCKS and AUDI have already been held to be famous, courts have held that the following do not qualify: TREK (bicycles), PETRO (truck stops) and TORNADO (vacuum cleaners). The analysis is more difficult for marks which fall somewhere in the middle. For example, PODS, MONSTER and STURGIS have been held to be famous, while COACH and APP STORE have been held not to be famous.

There are two important limitations to a mark being declared famous in the United States. First, it must be distinctive. This can be inherent or acquired through use of the mark over time (15 USC §1125(c)(1)). Second, fame in a limited geographic market in the United States or in a specialised market is insufficient (15 USC §1125(c)(2)). However, many states have their own version of dilution law which requires that the mark be famous only in the particular state.

Similarity to famous mark?

To complicate trademark clearance further, a mark may dilute a famous mark even if it is not identical to it. The Trademark Dilution Revision Act does not establish how similar a mark must be to a famous mark to create a likelihood of dilution. The act defines ‘dilution by blurring’ as “association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark”. It provides that the court may consider any relevant factor in determining the likelihood of dilution, including:

• the degree of similarity between the mark or trade name and the famous mark;
• the degree of inherent or acquired distinctiveness of the famous mark;
• the degree of recognition of the famous mark; and
• any actual association between the mark or trade name and the famous mark (15 USC §1125(c)(2)(B)).

Thus, the similarity of the mark to the famous mark is only one factor in determining likelihood of dilution.

US courts have held that a mark need not be identical, nearly identical or even substantially similar to a famous mark to be found to be diluting. Thus, even though a court found that MISTER CHARBUCKS and STARBUCKS were not substantially similar, there was still a possibility that the evidence would establish that MISTER CHARBUCKS could dilute the STARBUCKS mark based on consideration of all of the relevant factors (see Starbucks Corp v Wolfe’s Borough Coffee, Inc, 588 F 3d 97, 106, 92 USPQ 2d 1769 (2d Cir 2009)). After further proceedings, the court ultimately held that Starbucks had not proven dilution by blurring because the marks were only “minimally similar” (Starbucks Corp v Wolfe’s Borough Coffee, Inc, 736 F 3d 198, 209, 108 USPQ 2d 1581 (2d Cir 2013)). After initially requiring substantial similarity between a mark and the famous mark, the Trademark Trial and Appeal Board (TTAB) considered whether the two marks are “sufficiently similar to trigger consumers to conjure up a famous mark when confronted with the second mark’” (UMG Recordings, Inc v Mattel, Inc, 100 USPQ 2d 1868, 1888 (TTAB 2011).

Although similarity of the marks is only one factor in determining the likelihood of dilution, it is hard to imagine a case where a mark that is not substantially similar to a famous mark would be held to dilute its distinctiveness. Thus, from a practical standpoint, the inquiry may be best posed as: what is the likelihood that consumers would associate the mark with the famous mark based on their similarity? If there is a low risk of association, there is a relatively low risk of dilution.

When is fame determined?

US dilution law applies to use of a mark in commerce which begins after the owner’s mark has become famous. Thus, the owner of a famous mark cannot stop use of a diluting mark that began before the owner’s mark became famous. Similarly, in opposition proceedings, the TTAB has held that the owner of a famous mark must establish that its mark became famous before any use of the applicant’s mark as a trademark or trade name, and not merely before use in connection with the specific goods or services (Omega SA v Alpha Phi Omega, Oppositions 91197504 and 91197505 (March 31 2016)).

Can unregistered marks be considered famous?

There is no absolute requirement that a mark be registered in the United States to be considered famous there. Rather, whether the mark is registered on the principal register is one of four factors that a court may consider when determining whether a mark is famous (15 USC §1125(c)(2)(A)). Therefore, relying solely on searches of the US Patent and Trademark Office database to identify potential obstacles to registration or use of a mark may be insufficient to determine likelihood of dilution (or likelihood of confusion).

Can owners of unregistered foreign marks establish dilution?

Clearance of new marks is also complicated by the fact that the owner of a famous mark outside the United States may be able to stop use of a diluting mark there. In Fiat Group Automobiles SpA v ISM, Inc (94 USPQ2d 1111 (TTAB 2010)), Fiat opposed ISM’s application to register the PANDA mark for automobiles, based on its claim that its FIAT and FIAT PANDA marks were in the “category of famous marks in the United States” by virtue of being well known and famous worldwide due to worldwide branding and promotional efforts, and that its marks would be diluted by ISM’s registration. The TTAB concluded that it must “at least recognize the possibility that, in an unusual case, activity outside the United States related to a mark could potentially result in the mark becoming well-known within the United States, even without any form of activity in the United States”. It held that while US law provides protection for famous unregistered marks, it does not provide protection for famous unregistered marks “not in use, in some way, in the United States, in the absence of a specific pleading of intent to use, the filing of an application for registration, and some basis for concluding that recognition of the mark in the United States is sufficiently widespread as to create an association of the mark with particular products or services, even if the source of the same is anonymous and even if the products or services are not available in the United States”. Thus, there is at least a possibility that the owner of a foreign mark may successfully prevail on a dilution claim even if its products or services are not available in the United States.

Conclusion

Before launching a new mark in the United States, the trademark clearance process should include a determination of whether the new mark is likely to cause confusion or to dilute a famous mark in the United States. Although analysis of likelihood of dilution can be uncertain, in some cases it can avoid a potentially costly dispute when launching a new mark in the jurisdiction.

Michael J McCue

Partner

[email protected]

Michael J McCue is a partner in the IP practice group at Lewis Roca Rothgerber Christie LLP. He concentrates his litigation practice on trademarks, copyright, trade secrets, patents and rights of publicity. He has litigated hundreds of cases in federal courts throughout the United States and before the Trademark Trial and Appeal Board of the US Patent and Trademark Office. Mr McCue oversees a domestic and international trademark portfolio of more than 5,000 trademarks and has litigated cases for MGM Resorts, Nike, Visa, NBCUniversal, Restoration Hardware and Electronic Arts. In addition to litigation, Mr McCue provides trademark and copyright prosecution, counselling, clearance, transactional and enforcement services.