When Victor and Cathy Moseley announced the grand opening of their new retail store in February 1998, they could not have imagined that their decision to name their business “Victor’s Secret” would culminate in a U.S. Supreme Court decision in their favor and a subsequent act of Congress. The Moseley’s court case and the subsequent legislation which followed the Supreme Court’s decision focused on the trademark law concept of “dilution.”
Historically, trademark law has had as its main focus the protection of consumers from the confusion caused when a seller of goods or services uses another party’s trademark to identify goods or services which are the same as or closely related to the original trademark owner’s goods or services. Such use is said to confuse the consumer as to the origin of the identified products or services. A more recent concept in trademark law is that of dilution, which establishes that a trademark owner has a right to protect the investment it has made in developing and promoting a very strong trademark from infringement of that mark by others. As it has developed in recent years, trademark law now provides that a trademark is “diluted” when use of a similar or identical trademark to identify a non-competing product or service from that of the original trademark owner causes the mark to lose its capacity to uniquely identify the original trademark owner as the product’s source. The loss of that capacity is said to be “dilution” of the original user’s trademark. Generally speaking, for a trademark to deserve protection against dilution it must be distinctive or famous. Marks such as COCA-COLA and SONY are examples of marks which are commonly cited as having the required “distinctiveness.”
Unlike traditional trademark law protections, a claim of dilution does not require proof that there is a likelihood that consumers will be confused as to the origin of the product or service bearing the mark. Instead, dilution claims rest on the notion that the use of the allegedly infringing mark will cause a blurring or a tarnishing of the original mark. A mark is “blurred” if its association with a single famous product is compromised. It is “tarnished” if it is used in an unflattering way or to identify an unsavory product or service. In the Moseleys’ case, both “dilution by blurring” and “dilution by tarnishing” were alleged.
In 1998, the Moseleys opened their shop in an Elizabethtown, Kentucky strip mall, to sell adult novelty products and lingerie. They called it “Victor’s Secret” incorporating Mr. Moseley’s first name in a variation on the famous chain’s mark. Not long after its opening, in response to a complaint from the owners of the Victoria’s Secret chain of over 600 high-end lingerie shops, the Moseleys changed the name of their store to “Victor’s Little Secret”. Not satisfied with this change, Victoria’s Secret sued the Moseleys in Federal District Court on several grounds, including that the defendant’s name choice tarnished the Victoria’s Secret name in violation of the 1995 Trademark Dilution Act. The complaint’s basis: Victoria’s Secret did not want their mark associated with (and thereby diluted by) a store selling adult novelty products. The complaint alleges that the Moseley’s use of “Victor’s Little Secret” was “likely to blur and erode the distinctiveness” and tarnish the reputation of the VICTORIA’S SECRET trademark. Finding no evidence of actual confusion, the District Court entered summary judgment for the Moseleys on claims of traditional trademark infringement and unfair competition. However, on the dilution claim, the Court issued summary judgment for Victoria’s Secret and enjoined the Moseleys from further use of the mark “Victor’s Little Secret” on the basis that it caused dilution of the distinctive quality of the VICTORIA’S SECRET mark. The Court reached this conclusion even though it found no evidence that actual “blurring” of the mark had occurred.
That decision was affirmed by the United States Court of Appeals for the Sixth Circuit. Among the issues discussed by the Court of Appeals was whether relief could be granted before dilution had “actually occurred”. The appellate court held that it could, citing language used by Congress when it adopted the 1995 Act: “. . . dilution is an infection, which if allowed to spread, will destroy the advertising value of the mark.” As stated by the Court of Appeals: “This, then, is a classic instance of dilution by tarnishing (associating the Victoria’s Secret name with [adult novelty products]) and by blurring (linking the chain with a single unauthorized establishment).
Because the decision was inconsistent with that reached by another U.S. Court of Appeal, the Supreme Court, in response to the Moseley petition, elected to hear the case. The issue: Was it enough to prove that there was a likelihood of dilution – as the Sixth Circuit had decided – or was proof of actual dilution required to enjoin the use? To the great dismay of the owners of famous marks, the Supreme Court concluded that actual proof of dilution was required and the decision in favor of the Victoria’s Secret chain was reversed.
Faced with this adverse decision, the owners of “famous” trademarks collectively sought legislative relief. The Trademark Dilution Revision Act of 2006 (the “TDRA”), signed into law in late 2006, is the culmination of their efforts. With its passage, owners of marks which are distinctive and famous to the general consuming public are entitled to injunctive relief based merely on a showing of that there is a “likelihood of dilution” by blurring or tarnishing. The intended effect of the TDRA is to overrule the U.S. Supreme Court’s holding in the “Victoria’s Secret Case.”
While the Moseley’s judicial saga may be interesting, it is really much more than that because it provides useful insights for all business owners seeking to select and develop a trademark “brand” for their products or services. Of course, care should always be taken in choosing a new mark to avoid the expenditure of time and money to create a “brand” identity which a prior trademark user might successfully compel you to abandon because of its likelihood to cause consumer confusion. Beyond that, particular care must be exercised where the chosen mark may bear close similarity to a mark which is famous to the general consuming public. While most business owners now know that they cannot copy a mark which is confusingly similar to a mark used by someone else to identify a product or service similar to theirs, the pitfalls of “dilution” may not be so readily apparent.